After two consecutive months of double-digit contraction, preliminary estimates for December suggest that the decline in exports is levelling off. Outbound shipments in December 2008 were worth $11.8 billion, only 4% less than December 2007?s $12.3 billion, a senior government official said.

Significantly, the Centre does not expect any further sharp declines in export growth in the remaining three months of 2008-09. But the next financial year could be gloomier, so the government is working out a series of measures to protect domestic industry and the export sector.

Gems & jewellery exporters operating from special economic zones (SEZs) would be allowed to sell up to a quarter of their production to the domestic tariff area (where normal taxes and duties apply) by paying concessional duty.

Currently, SEZ units have to pay full customs duty on sales to the domestic market. Moreover, they would not be required to pay any import duty on value addition, which they would have had to in the normal course. Of course, such sales will be permitted in a manner that does not weigh against players outside SEZs.

Meanwhile, an empowered group of ministers led by foreign minister Pranab Mukherjee is meeting next week to consider a reduction in the minimum export price on basmati rice from $1,200 a tonne to $1,000. The eGoM is also likely to scrap the export duty of $200 a tonne imposed on basmati.

The export restrictions were imposed in April, but were rendered redundant after the commodities markets cooled off by September. Pakistan reacted with alacrity, lowering its minimum export price for basmati to around $800 a tonne, gaining substantial marketshare in India.

The package of measures to protect domestic industry includes imposition of additional safeguard duties on the import of aluminium, steel, tyres, some electronic goods and several items in the chemicals sector. Imports of these have been soaring dramatically.

Chemicals is one sector where India is competitive, with 12% of the global marketshare, but the domestic industry is not getting orders due to cheap imports, an official said. The steel, aluminium and chemicals industries have sought anti-dumping duties, but since that is time-consuming, the Centre is resorting to safeguard duties.

There is some cheer for services exporters, too. Around Rs 100 crore in service tax would be refunded. Currently, only Rs 10 lakh has been released for the purpose.

Pointing to the recession in Europe and North America, which accounts for 37% of India?s manufactured goods exports, A Sakthivel, president, Federation of Indian Export Organisations (FIEO), said total exports for this fiscal would be only $175 billon, which is $25 billion short of the $200-billion target set by the government.

?Our quick estimates based on sectoral analysis indicate that if the present trend continues, there will be approximately 10 million job losses by March 2009. Sectors such as textiles, gems & jewellery, handicrafts and engineering will see job losses of more than a million each,? he said.

However, there are signs of recovery. Around 3 lakh people have returned to work in the diamond hub of Surat in Gujarat, according to the commerce ministry. Surat?s diamond cluster had reported 7 lakh job losses and at least 14 worker suicides in the recent past. According to government estimates, the December 2008 exports data showed that textiles exports declined by 18% against December 2007, while other employment-intensive sectors that showed a decline in the same period included gems & jewellery (-21%), handicrafts (-64%) and chemicals (-21%).

According to research firm Dun & Bradstreet, exports for the fiscal are likely to miss the target of $200-billion and would touch only around $182 billion. It said the trade deficit would be $121 billion, as imports would be around $303 billion.