New Delhi: The government will provide an additional incentive of Rs 1,050 crore to labour- intensive sectors like handicrafts, handlooms and leather goods, whose exports have been badly hit by the downturn in the US and Europe, Commerce and Industry Minister Anand Sharma said.

"In order to give immediate relief, a bonus incentive is being provided to sectors whose exports are still not doing well," Sharma said, announcing the annual supplement to the foreign trade policy, reports IANS.

The government has already announced an incentive package of Rs 1,350 crore. "Rs 1, 050 crore bonus incentive will be in addition to the package announced earlier," Commerce Secretary Rahul Khullar said, adding the incentive schemes will be effective from April 1, 2010.

Labour intensive sectors such as handicrafts, handlooms, silk carpets, leather and leather manufacturers, sports goods, toys and some bicycle parts businesses are covered under the scheme.

India's exports growth slowed to 13.2 per cent in July this year against 30.4 per cent in the previous month. This has prompted the government to announce incentive measures otherwise it would not be feasible to achieve a target of US $200 billion exports in fiscal 2010-11.

"Some sectors are still struggling to recover from the demand shocks of the global economic slowdown. For these sectors we are providing additional benefits," Commerce Minister said.

In addition to the above mentioned sectors, certain new engineering and electronic items, finished leather, rubber products, packaged coconut water and coconut shell worked items have been covered under the incentive scheme.

Talking to reporters, Khullar said the incentives would be in the form of revenue outgo. "It will be basically in the form of tax outgo and interest rates incentives," he added.

The facility of interest subvention of 2 per cent, currently available for handicrafts, handlooms, carpets and SMEs, is being extended for a number of specified products pertaining to leather and leather manufacturers, jute manufacturing, including floor covering, engineering goods and textile sector for the current financial year.

On US $200 billion merchandise exports target for the current fiscal, the Minister said, "with the present growth trend, we are on course to achieve export target for 2010-11."