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MAI to have wider scope than MDA

MoC puts in place market access initiative scheme

Reena Mital - Mumbai

The commerce ministry has put in place the market access initiative (MAI) scheme, which will gradually replace the market development assistance (MDA) scheme, over the next 2-3 years.

According to industry sources, the decision to phase out the MDA scheme follows the rampant misuse of the scheme, besides its limited scope. “While getting funds under the MAI scheme may be slightly difficult, the quantum of assistance will be at least 3-4 times more than that under MDA. Moreover, MAI will have a wider scope than MDA,” informed sources.

The wider coverage of MAI is evident in the objectives of this scheme, which include:

• Identifying priorities of research relevant to the department of commerce and sponsoring research studies consistent with the priorities.
• Arranging for wide dissemination and discussions on the results of such studies.
• Supporting EPCs/ trade promotion organisations for market surveys/studies for selected products in the chosen countries to generate data for promotion of exports from India.
• Assisting exporters and EPCs for participation in international departmental store promotion programmes, intensive publicity campaigns and participation in international trade fairs, seminars, buyer-seller meets for a few selected focus products in focus countries.
• Assisting exporters and EPCs in promotion of India, Indian products and Indian brands in the international market.
• Assisting projects for research and product development.
• Assisting any other activity, appropriate for promoting chosen products on country-product focus approach basis.
• Supplementing state government efforts in carrying out export potential survey of the state for identified product groups.

As against this, the objectives of the MDA scheme were mainly to identify and sponsor research studies relevant to the department of commerce, and arrange for wide dissemination of and discussions on the results of such studies.

As per the MAI scheme, export promotion councils and trade promotion organisations will be required to project their requirements for undertaking marketing promotion efforts abroad on country-product focus approach basis in a single project. For each product, exporters participating in the project should be identified by the EPC. Selected exporters will identify the need for intervention, its components and cost sharing by them within the parameters of the scheme. The project should aim at intervention on a sustained basis over the next 2-3 years and support from the scheme will decline over the period each year. Moreover, the projects will have to be aimed at promoting exports of branded products in addition to general export promotion activities like participation in fairs, buyer-seller meets, workshops, etc. Generally, the scheme stipulates 70 per cent of the support for branded exports.

The project will be examined by an empowered committee in the department of commerce.

For the 2004-05 fiscal year, the various EPCs, trade promotion organisations, etc will have to submit their projects by February 15. It is learnt that many EPCs are now in the process of completing the proposals for submission to the empowered committee, which will have the commerce secretary as the chairman, and other members include the ITPO chairman, director general of IIFT, DGFT, etc.

The projects could include the following activities:

• Marketing studies: on country product focus approach basis, for an in-depth analysis of the existing and potential markets for evolving market related strategy, meeting the requirements of each market with regard to the local taste, requirements and quality.
• Showrooms: would be set up for selected consumer items at identified centres on the basis of marketing studies in leased or rental accommodation. The participants will bear the rental/leased charges and full maintenance. The scheme will bear 75 per cent, 50 per cent, 25 per cent of the lease/rental charges in the first, second and third year, respectively.
• Warehousing: facilities will be set up on the same pattern as showroom to ensure quicker deliveries.
• Participation in international department stores: Tie-ups with local distributors and major stores will be used as a tool for promoting products. A list of international departmental stores and chains will be prepared and standardised. Supplies to these stores under brand names and ‘Made in India’ labels will be rewarded two per cent of the fob value at the time of initial entry and one year thereafter.h Publicity campaign: The scheme will encourage intensive campaigns in chosen markets through advertisements, pamphlets, banners, hoardings, radio and television. The products and locations will be determined on the basis of the specific market studies undertaken. And 20 per cent of the expenditure will be borne by the concerned export organisation and 80 per cent by the scheme. This ratio will be reviewed after two years of operation of the scheme to make it on matching basis.
• Participation in international trade fairs, seminars, buyer-seller meets: A list of selected exhibitions and trade fairs, based on market studies to gauge response to participation in the fairs will be circulated in the industry. Full cost of participation will be met by the scheme except the TA/DA, which would be met by each participant.
• Brand promotion: The promotion cost of selected individual branded products will be recommended to the IBEF Trust for considering reimbursement to the concerned exporters as per the IBEF guidelines by way of soft medium term loans to be payable in 5-7 years period, with nominal royalty on the incremental sales. The promotion expenses of promoting India as a reliable supplier of quality products would be fully borne by the scheme. Support for this activity would be solely part of the project.
• Research and product development: Exporters, EPCs and trade promotion organisations will be assisted in modernising and upgrading the identified products as per the needs of the target markets. Upto 25 per cent of the approved cost of research and product development will be borne by the scheme.
• Export potential surveys of the state: Such surveys would be funded equally by the scheme and the state governments, and the concerned EPC will be the coordinating agency for such surveys.