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High shipping costs: Scheme to aid Indian farm exporters back & fortified

Amid a surge in shipping costs, the government on Friday extended some relief to exporters of specified products by reintroducing the Transport and Marketing Assistance (TMA) scheme, with wider coverage and much larger support, for one year.

Under TMA, which was valid up to March 2021, the government reimbursed exporters a certain portion of freight charges and offered assistance for the marketing of select agricultural produce.

Rates of assistance have been increased by 50% for exports by sea and 100% for those by air. Similarly, dairy products, which were not covered under the earlier TMA scheme, will now be eligible for assistance, the commerce ministry said in a statement.

FE had on September 5 reported that the government was considering extending the scheme for at least one more year with enhanced support.

Under the revised scheme, which will be in force until March 2022, exporters of specified farm products will be granted aid in the range of Rs 8,400 to Rs 35,700 for shipping out a normal container (20-foot long) of goods, depending on the destination. Earlier, this support was in the range of Rs 5,600 to Rs 23,800. Similarly, the assistance per 20-foot refrigerated container will range from Rs 18,375 to Rs 47,250.

For exports by air, an aid of Rs 1.4-7 per kg will be extended. Earlier, it ranged from 70 paise to Rs 3.5.

The highest assistance will be for exports to South America and the lowest to Asean region (or Far East for refrigerated container), based on the proximity criterion.

The TMA scheme, introduced in March 2019, was initially applicable for exports undertaken up to March 31, 2020. Subsequently, it was extended up to March 31, 2021.

The move is part of a series of short-term and long-term measures being considered by the government to help exporters tide over a spurt in their shipping costs, which surged by over 300% in August from a year before. The Centre is also planning to encourage domestic companies to ramp up the production of containers, an acute shortage of which has accentuated the current crisis.

The crisis hits exporters at a time when they are striving to reap benefits of a resurgence in global demand for merchandise, and threatens the country’s ambitious $400-billion export target for FY22.

Of course, shipping costs have gone through the roof across the globe and India isn’t an outlier. In fact, the costs in China have surged at a much faster pace than in India. However, given Beijing’s massive covert subsidies, the competitiveness of its exporters remains intact. So, the Indian government, too, must find ways to cushion the blow to them, domestic exporters said earlier.

Farm exports have remained insulated from the havoc wrought by the pandemic. In the first four months of this fiscal, they grew by over 31% to almost $15 billion, even on a relatively unfavourable base. In FY21, despite Covid-induced supply disruptions in initial months, outbound shipments of farm commodities grew 17%, against a 7% drop in overall merchandise exports.
Source: Financial Express

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