India extends export schemes while moving against cement

New Delhi: India on Friday extended a slew of schemes designed to boost exports, but moved to curtail overseas sales of steel and cement to ease price pressures as inflation surged to a new three-year high.

Trade Minister Kamal Nath said exports in the last fiscal year would exceed $155 billion, falling just short of a $160 billion target due the impact of a rising rupee, which surged by more than 12 per cent against the dollar in 2007.

In a bid to reach a $200 billion target for 2008-09, he announced that tax refunds and interest subsidies for many exports would continue for another year, and there would be new incentives to promote exports of vegetables, sports goods, toys and computer hardware.

Global trade

India, he said, hopes to grab a five per cent share of global trade by 2020, given buoyant exports.

"What's more remarkable about all our achievements is that they have been accomplished in the face of appreciation of the rupee, high interest rates, spiralling oil prices ... and a general economic slowdown in some of our major trade markets," Nath said as he outlined trade policy.

India produces 11 per cent of the world's vegetables and 15 per cent of its fruits, but accounts for only 1.7 and 0.5 per cent respectively of world trade in those products, he said.

But Nath said the government was withdrawing export incentives for steel and cement products in a bid to tame inflationary pressures. He later said cement exports would be banned soon.

Data on Friday showed India's headline inflation raced to an annual 7.41 per cent in late March, its highest in more than three years and a major political headache for a government which must face voters at national elections by May 2009.

Value addition

Nath outlined a plan for enhanced incentives for value-added manufactured products and said the list of products eligible for such a scheme would be announced later.

The government will also set up an export promotion council for the telecom sector to raise sector exports, expected to exceed 100 billion rupees ($2.5 billion) in 2011.

Nath said he would continue to seek enhanced market access for India's goods and services at global trade talks, and protect the country's farmers from trade distorting subsidies provided by developed countries.

He said a stalemate in the talks was not due to any unreasonable position taken by developing countries like India.

"The negotiations remain inconclusive on account of the recently discovered fear and shyness from trade liberalisation by the developed countries," he said.