Punjab basmati finds too many fees stifling

Lack of raw materials to run mills, and a 4 per cent impost (2 per cent market fee plus 2 per cent rural development fee) have put the basmati rice industry in a spot. Exporters feel this additional burden will make it difficult for them to compete with exporters in Haryana and Uttar Pradesh.

Talking to Business Standard, KRS Sobti, an exporter and partner in Deva Singh Sham Singh, said, "Although we have a locational advantage, given that Punjab's basmati has the best taste, fragrance and length compared with other states, there is also a geographical disadvantage here, because we have to pay a 4 per cent tax on the rice brought outside the state.These taxes are not applicable to Haryana."

"Moreover, we have to pay a 4 per cent tax as VAT, although it is refundable in case of exports. Besides that, we do not have access to all 13 varieties of basmati", he added. He further said in order to avoid the market fee, many exporters were gradually shifting base from Punjab to Haryana and Uttar Pradesh.

According to sources in the Agricultural and Processed Food Products Exports Developments Authority (APEDA), during 2004-05, basmati exports from the country were to the tune of 11.2 lakh tonnes, and Punjab's contribution to exports was 25 to 30 per cent. Basmati rice is exported to the US, Canada, Australia and European countries.

Rajeev Setia, director, Chaman Lal Setia Exports Ltd, said players in Punjab should be subjected to the same conditions that existed in other states for exporters. He further added there should be one basmati zone in Amritsar similar to the basmati belt in Uttar Pradesh, in order to promote exports.

"Most exporters have shifted base from here due to high input costs incurred in the process of exporting from Haryana and Delhi," he said. Exporters believe this year the market sentiment is quite low as compared with the previous year because stocks have not been disposed of from the last two years.