New Delhi, Aug 23 - The government should announce subsidies to the crisis-hit exporters in the forthcoming foreign trade policy to make India's exports sector more competitive, the Associated Chambers of Commerce and Industry (Assocham) has said.

'Subsidies need to be extended to Indian exporters by substantially reducing excise and local levies and other export duties,' Assocham president Sajjan Jindal said in a paper submitted to Commerce and Industry Minister Anand Sharma.

The government will announce the foreign trade policy for the next five years Aug 27.

India should create a space for its products in overseas markets and earn for a reasonably substantial foreign exchange through exports, the chamber said in the report.

'The country needs foreign exchange to correct trade imbalances in its exports and imports.'

India's exports sector has seen a contraction for nine straight months starting from October 2008.

Assocham has also urged the government to allocate funds for expanding the capacity of major ports.