Incentives to revive industrial downturns

Incentives to revive industrial downturns

Several measures / initiatives have been taken by the Government to insulate the domestic industry from the impact of global recession and stimulate domestic demand.

The measures to stimulate domestic demand inter-alia include reduction in ad valorem CENVAT duty, incentives to the housing sector with a view to give a boost to affordable housing, and sector specific initiatives. For automobile sector an accelerated depreciation of 50% on commercial vehicles was announced and assistance to the States under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) provided for purchase of buses for urban transport system.

Further, a set of measures were announced for enhancing the flow of funds to the MSE sector.

The various measures to support exports include interest subvention of 2% for pre & post shipment export credit for identified labour intensive industries, additional allocation for export intensive schemes, additional funds towards providing guarantee by the Export Credit Guarantee Corporations (ECGC) and enhancements of duty draw back benefits on certain identified exportable items.

In addition, RBI has taken a number of steps to reduce the cost of credit and improve liquidity for the industry such as reduction of the Repo rates, reverse Repo rates, Cash reserve ratio etc.

As a consequence of various measures taken by the Government, there are early signs of recovery of the industrial sector. The index of industrial production which registered a negative growth rate of (-) 0.7% and (-) 0.8% in February and March 2009 respectively has improved to 1.4% in April, 2009 and further to 2.7 % in May, 2009.

This information was given by Shri Jyotiraditya M Scindia, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.