The commerce and industry ministry is working on a mechanism that will make Indian exports to Africa as competitive as those from China.

The ministry is launching a scheme that will help exporters bid more aggressively for projects. This is being seen as a route to increasing exports, which declined by 4 per cent in the April-February period of the current fiscal.

"We are launching a co-finance scheme for project exports in partnership with EXIM Bank. The bank will provide co-financing to exporters at cheaper rates that will make Indian companies more competitive. Initially, we are starting the scheme in African and Asian countries," a government source told The Indian Express.

Several exporters have been demanding that the projects be co-financed so that they can bid more aggressively in emerging markets where China, that already provides such facilities to its exporters, has gained substantial access.

The co-financing scheme would be for high-ticket projects like road construction, and hydel power and it will also help in increasing the value in export earnings, the source added.

"We are staring it on a pilot basis. The finance ministry has already given a go ahead. Now the ministry is in discussion with the Planning Commission to see if the funding for providing a boost to exports can increase in the 12th Plan period," the source said.

Operational guidelines are in the process of being issued by the EXIM Bank for project exports. The exporters will get an interest subvention of 2 per cent on such co-financing which will be provided at Libor plus 2.5 per cent for projects of five years, Libor plus 3 per cent for projects of 5-10 years, and Libor plus 3.5 per cent for projects of more than 10 years.