Additional export sops doled out to a selected exporters last year in a bid to fight the economic downturn, now runs the risk of being discontinued. According to senior officials in the commerce ministry, the finance ministry is yet to release the non-budgeted Rs 1,350 crore that was allocated last fiscal year under chapter three incentive schemes to few sectors.

A government source said commerce minister Anand Sharma has already written to finance minister Pranab Mukherjee urging him to release the money, but no assurance has been forthcoming as yet. The commerce ministry has allayed fear that North Block may not allocate the money due to the turnaround in merchandise exports.

In fact, the export review carried out by the commerce ministry periodically has also not been released so far. ?Our minister has already written to the finance ministry. However, there has been no response from that side yet…exports have still not recovered,? he added. Source added the delay was causing worry and the commerce ministry would not commit any fund allocation till the money was released. Earlier in January this year, the commerce ministry had announced a slew of incentives for more than 2,000 products that were hit due to the slowdown. Among the products that received the government aid were leather, rubber, chemicals and engineering goods. These incentives were for the period March 31, 2010. Only garment sector has been given incentives till September 31, 2010.

After a 13-month decline, exports have been showing signs of a turnaround from November 2009. In April, merchandise exports surged 36% to $16.9 billion. Even the WTO has predicted a revival in global trade this calendar year.

Despite positive turnaround signs in exports, commerce ministry officials are still cautious. Low base effect has played a big role and exporters may be further hit due to the Euro zone crisis and an appreciating rupee.

Director general of foreign trade RS Gujral told FE, ?The situation (of merchandise exports) is still fluid. Export growth in the last few months have been on an account of a low base effect. But now there are new issues pertaining to EU and appreciation of rupee that are coming up. The sector wise impact of these issues are different,? he said.