70 per cent of the present flow to countries worst-hit by the global economic slowdown
The government, in its new foreign trade policy, has identified 26 new markets to which exports would be eligible for sops. While increasing the incentive under schemes like Focus Product and Focus Market, the policy also extends such schemes to more products.
The policy has come when exports have fallen by 30 per cent in the past 10 months. “It is important to take an initiative to diversify our export markets and offset the inherent disadvantage for our exporters in the emerging markets of Africa, Latin America, Oceania and CIS countries, such as credit risks, higher trade costs, etc, through appropriate policy instruments,” commerce and industry minister Anand Sharma said at the announcement of the new policy. At present, India's $168 billion of exports are highly concentrated in Europe (36 per cent), the US (18 per cent) and Japan (16 per cent) and these are the worst hit in the current global financial crisis.
While the incentive available under the Focus Market Scheme (FMS) has been raised from 2.5 to 3 per cent, that under the Focus Product Scheme (FPS) has been raised from 1.25 to 2 per cent. Engineering products such as agricultural machinery, parts of trailers, sewing machines, hand tools, garden tools, musical instruments, clocks and watches and railway locomotives, value-added plastic products, jute and sisal products, technical textiles, green technology products such as wind mills and wind turbines, electrically operated vehicles, project goods, and certain electronic items have been included in FPS.
Export of products like pharmaceuticals, synthetic textile fabrics, value-added rubber products, value-added plastic goods, textile madeups, knitted and crocheted fabrics, glass products, certain iron and steel products and certain articles of aluminium would be eligible for FMS if exports are made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand).
Market-linked FPS benefits have also been extended for export to more new markets for certain products. These products include auto components, motor cars, bicycles and parts, and apparel, among others. A higher allocation for Market Development Assistance and Market Access Initiative schemes has also been provided.