New Delhi: Ahead of the Foreign Trade Policy review, industry body CII has asked the government to continue incentives like Focus Market Scheme, under which exporters get benefits on shipping goods to particular markets.
"Continuation of Focus Market Scheme (FMS) and Focus Product Scheme (FPS) will help in boosting the country's exports and help in achieving the USD 500 billion target by 2014-15," CII said.
These schemes were announced under the Foreign Trade Policy 2009-14.
Under the FMS, various benefits are provided to reduce high freight cost to select global markets like Latin America. It allows duty credit of 2.5 percent of FOB (free-on-board) value of exports to countries that are identified as focus markets by the government.
While under the Focus Product Scheme, duty credit facility at the rate of 2.5 percent of FOB value of exports of notified products, including textiles and chemicals is given to exporters.
The chamber said revival of export growth could be done by addressing infrastructure bottlenecks and reducing cost of credit should be the primary focus of the government.
Expressing concern over widening trade deficit, CII said, another worrisome trend which is adding pressure on India's external sector is Current Account Deficit (CAD) which has touched about 4.3 percent of the country's GDP during October-December 2011 year-on-year.
"Such a sharp widening of CAD has been witnessed for the first time in about two decades and this demands a quick policy intervention to arrest this dismal trend," CII said.
A rise in CAD takes place when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers.
During April-February period, exports aggregated to USD 267.4 billion, a year-on-year growth of 21.4 percent, while imports grew by 29.4 percent to USD 434.2 billion during the 11 months period of 2011-12.
About special economic zones (SEZs), CII said that the government should withdraw the imposition of Minimum Alternate Tax (MAT).
In the Union Budget 2011-12, the government imposed a minimum alternate tax (MAT) of 18.5 percent on the book profits of SEZs developers and units.
CII said lack of infrastructure, particularly ports and airport connectivity are acting as deterrents for exports growth and lack of operationalisation of approved SEZs.
Exports from SEZs contribute about 34 percent to the country's total merchandise exports.