The Indian government is proposing to spend an extra $4bn in the remaining four months of the current fiscal year to try to boost growth in labour-intensive export industries such as textiles and apparel, which are caught up in the economic slowdown.

The plan follows a cut in interest rates by the central bank at the weekend, bringing them down for the third time in less than two months.

The spending will run from this month to the end of next March, and will combine incentives and tax reductions.

Measures will include a refinance facility for small and medium industries, a 4% cut in the central value added tax (cenvat) rate to encourage additional spending, a 2% interest rate subsidy on bank loans to exporters, and pre and post-shipment export credit on labour intensive exports such as textiles and clothing.

For textile firms, an additional INR14bn is being made available to clear the backlog in the technology upgrade funding scheme (TUFS).

Exporters will also be allowed a refund of service tax on foreign agent commissions of up to 10% of the FOB value of exports.

However, many export-oriented textile firms say the package does not do enough to help them, and that more concrete measures are needed to help fight a slump in demand from consumers in the US and Europe.

India's total exports fell 12.1% in October - the first drop in seven years. And garment exports in the current fiscal year are likely to fall far short of their US$11.62bn target.

In its last fiscal year, India exported garments worth $9.69bn, a rise of 9% on the previous year.

In September, the government cut duty drawback rates for cotton apparel from 11% to 8.8%, for blended apparel from 11.2% to 9.8%, and for synthetic apparel from 11.5% to 10.5%.

The country's economy has also been damaged by the recent terrorist attack in Mumbai which killed 163 people.