India to Extend Benefits for Exporters Hit by Virus

(Bloomberg) -- India plans to extend incentives for exporters that are ending Tuesday to help companies hit hard by a demand slowdown globally due to the coronavirus outbreak, people with the knowledge of the matter said.

The trade ministry will continue offering the benefits worth $3.2 billion for the next six months, the people said, asking not to be identified as the discussions are private. The plan offers incentives depending on the value of goods shipped overseas, which can be then used for offsetting duties or sold to other exporters. A spokesman at the commerce ministry wasn’t immediately available for a comment.

Prime Minister Narendra Modi’s administration is attempting to insulate Asia’s third-largest economy from a contraction as the pandemic threatens to wipe out global growth. Apart from export incentives, the government has announced a 1.7 trillion rupee spending plan to ease impact of the disease on the poor, liberalized regulatory rules such as extending deadlines for filing tax returns and allowed companies to divert their philanthropy spending to support the virus fight.

Separately, the Reserve Bank of India and the government are in talks to extend an interest subsidy program where small and medium exporters will get a relief of 5%, the people said.

The policy offers benefits to offset costs related to goods produced in India. These benefits help in making Indian exports more competitive in global markets and range between 2%-5% of the value of exports for goods. For services, incentive varies between 3%-5% of the value of exports. The government gave incentives worth over 480 billion rupees in 2019-20, according to budget documents.

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