Faced with a widening trade deficit, the Indian government on Wednesday announced a slew of incentives to reverse decline in exports which will still fall much short of the $360 billion target for the current fiscal.
The two per cent interest subsidy scheme, which was to end on March 2013 has been extended for one more year.
Besides, more sectors have been covered under it with the engineering exporters being the major beneficiaries.
Merchandise shipments to the US, European Union and the Asian markets will qualify for additional sops. Exporters are facing a demand slowdown in these markets.
Unveiling these measures, India's Commerce and Industry Minister Anand Sharma said, "With these measures, we should be able to give a push to our exports in the last quarter of this financial year. The objective is to stabilise the situation and try and move from the negative territory to positive".
He also expressed the hope that with the help of these steps exporters will be able to ship more and help the country reduce the widening trade gap, which has touched $175.5 billion between January-November.
Rising trade deficit has been cited by several global rating agencies like S&P as a key area of concern for the Indian economy.
While exporters have welcomed the sops extended by the government, the minister did not quantify the total benefits which will accrue to the sector.
Exports during April-November period this year contracted by 5.95 per cent to $189.2 billion. Merchandise exports are in negative zone since May this year.
On the $360 billion exports target for this fiscal, he said: "Given the global slowdown and the contraction at some of the major destinations of India's exports, we are finding it difficult to meet the target."