Rs 300 cr subsidy for farm exports sought

The commerce and industry ministry has sought an allocation of Rs 250-300 crore for 2004-05 to provide subsidy under the foodgrain export policy. The issue is slated to come up in the next Cabinet meeting.

Senior government officials told Business Standard that the finance ministry had 'in-principle' approved the scheme, which would be operated by the Directorate General of Foreign Trade (DGFT).

"We have prepared the proposal for the Cabinet, and in all likelihood the issue will be taken up in the next Cabinet meeting," an official said.

The subsidy scheme, which would be compatible with the World Trade Organisation guidelines, would be applicable only for rice exports this fiscal as the rabi season was long over.

"Our objective is to provide the subsidy to rice this fiscal and from the next fiscal extend the subsidy to wheat," the official said, adding that the allocation for the subsidy next year would then double to around Rs 600 crore.

The officials said concerns in some quarters over starting rice exports this fiscal had been addressed as the price of rice in the domestic market was nearly five-and-a-half times lower than in the international market.

"Rice stocks will go up further, bringing down the price. There is no threat to domestic availability of rice on account of exports, as exports will stop if domestic prices go up," the official said.