The government on Wednesday unveiled incentives worth Rs 625 crore to exporters of garments, electronic and engineering goods and agro chemicals, as the demand for these products are yet to pick up in key western markets while the country?s overall exports are looking up. The sop, equivalent to 2% of the export value, will be available for six months starting from April 1, commerce minister Anand Sharma said here on Wednesday.

Bulk of these incentives (Rs 400 crore) , under the commerce ministry?s market linked focus product (MLEP) scheme, would go to garment exporters, with 300 export items to the two largest markets ? the US and 27-country EU bloc ? being eligible for the benefit. India?s apparel exports declined by 14% to $862 million in January 2010 compared to $998.31 million in January 2009.

Besides, 200 other products in engineering, electronics, agro chemicals and pesticides segments have been added to the MLFP scheme, with linkage to specific markets, with an entitlement of Rs 225 crore.

The sops come at a time when exporters are jittery over the rise of the rupee, despite the positive growth in exports for four straight months up to February, when the growth was an impressive 35%. The rupee had appreciated against the dollar to a new high of 44.92 on March 31.

In Budget 2010-11, the interest subvention of 2% on pre-shipment export credit was extended to March 31, 2011.

Federation of Indian Export Organisations president A Sakthivel welcomed the government decision to expand the MLFP scheme and said it would impart competitiveness to the exporters. The incentive is timely and would help push diversification both at the product and market levels,? he said.

Garment, handicrafts and the leather sectors were expected to be the worst-hit due to the currency appreciation. This prompted Fieo to call for fixed exchange rate for exporters. Exporters fear that they would lose out heavily against the Chinese counterparts, if the rupee remains strong.

Apparel Export Promotion Council chairman Premal Udani told FE, ?Yarn prices have increased 40%. This is an additional worry when the strong rupee is already a big concern. We hope the government will take bolder steps to help this sector.? During April-January 2009-10, garments exports stood at $7.91 billion compared to $8.81 billion in the same period previous year. Indian Institute of Foreign Trade director KT Chacko said that the move by the government would help garment sector to diversify. ?Since garment and leather are labour-intensive sectors it employees people from the vulnerable sections,? he said.

Exports rise 35% in Feb

India?s exports grew a robust 35% in February on the back of revival in demand in key markets like the US and European Union, in a clear indication that there is a fundamental positive shift in the country’s export demand and that the growth is not merely because of a base effect.

This was the fourth successive month of expansion in the country?s exports that were hit hard by the global economic recession that began in the wake of the mid-September 2008 financial meltdown. India’s exports grew at 11.5% on an year-on-year basis in January 2010. In November and December 2009, exports grew 18.2% and 9.3% respectively.

However, cumulative exports between April and February 2009-10 were still 11% lower compared to the same period of the preceding fiscal.

Imports rose 66% to $25.06 billion in February against $15.08 billion in the corresponding month of the previous fiscal. As in the case of exports, cumulative imports between April and February declined 13.5% to $248 billion, compared with the same period of the last fiscal. Exports during February were valued at $16.09 billion, compared with $11.94 billion in the same month of the past fiscal. The cumulative exports between April and February declined by 11% to $153 billion, compared with the same period of the previous fiscal. Exports fell to $11.91 billion in February 2009 from $ 15.22 billion in the corresponding month of the preceding fiscal. Imports declined to $16.82 billion from $21.93 billion. That helped India to reduce its trade deficit to $ 4.91 billion from $ 6.1 billion in January.

Exports started declining in October 2008 in the wake of the global economic recession triggered by the financial meltdown of mid-September 2008. The trend continued for 13 months before exports picked up in November 2009. However, sectors like engineering goods, textiles, jute, carpets, handicrafts and leather are yet to see rebound in their export demand. For example, India?s apparel exports fell 14% in January in dollar terms compared to the same period of the previous year.