Punjab offers incentives to Basmati buyers

The state cuts both the market fee and rural development fee by 1% in order to motivate the buyers from outside the state

To safeguard the interests of the Basmati cultivators and encouraging crop diversification in the state, Punjab Chief Minister Parkash Singh Badal on Tuesday allowed the incentives given to the Basmati millers during 2013-14 to continue, besides slashing both the market fee and rural development fee by one per cent in order to motivate the buyers from outside the state.

The Punjab government had waived mandi fee (2 per cent), rural development fee (2 per cent) and infrastructure fee (3 per cent) on the purchase of basmati for milling in Punjab during 2013-14. Such a measure was taken to encourage farmers to grow more basmati instead of common paddy that requires more water.

Earlier, basmati exporters were required to pay these fees/charges and claimed refund thereof because taxes on export of goods were zero rated as per the policy of the government, but the millers of Punjab said there were difficulties in refund of fees/charges paid by them as a result of which a large chunk of their working capital used to get stuck in transit, rendering milling in Punjab uncompetitive.

With a waiver of fees, the government provided procedural comfort to the millers to encourage not only more cultivation of basmati paddy but also to promote investment in rice-milling industry.

During 2013-14, paddy was sown in about 2.85 million hectares, of which basmati paddy was sown in about 550,00 hectares.