The government on Friday set an export target of $200 billion for the 2008-09, up from $160 billion last year, even as it withdraws incentives for export of cement and steel to contain inflation.

 In order to help the exporters hit by appreciation of rupee and slowdown of global economy, the government has reduced customs duty on import of capital goods from 5 per cent to three per cent under the Export Promotion Capital Goods (EPCG) scheme.

Unveiling the annual supplement to the Foreign Trade Policy (FTP) in New Delhi, Commerce and Industry Ministry Kamal Nath said interest subvention to help rupee-hit exporters will be extended by one more year, while the average export obligation under the EPCG scheme will reduced.

The export target for the current financial year has been pegged at $200 billion, he said adding, the total exports during 2007-08 are likely to exceed $155 billion, lower than target of $160 billion.

As part of the fiscal exercise to check inflation, which touched 7.41 per cent, the Government has withdrawn incentives for export of cement, primary steel products.

The other export promotion measures announced by Nath in the annual supplement to the FTP include extension of income tax exemption to the 100 per cent Export Oriented Units (EOUs) till 2010. The tax incentives were expiring on March 31, 2009.

Taking note of the worldwide growth in the telecommunications sector, the Commerce Ministry has also decided to set up a separate Export Promotion Council for the telecom sector to facilitate exports.