The Punjab Government on Tuesday decided to continue with incentives given to the Basmati Millers during 2013-14.
In addition, the State Government has also decided to slash both the market fee (MF) and the rural development fee (RDF) by one per cent to motivate the buyers from outside Punjab for the purchase of basmati.To purchase basmati, the Market Fee and Rural Development Fee would be charged at one per cent each against two per cent each charged earlier.
The decision, taken by the Chief Minster Parkash Singh Badal after series of deliberations with representatives of farmers, millers and the officials of the State Government, was aimed at getting more buyers to enter Punjab’s market to purchase basmati for safeguarding the interests of basmati cultivators on one hand, and encouraging crop diversification in the state on other.
Punjab Government has already waived Mandi Fee (two per cent), Rural Development Fee (two per cent) and Infrastructure Fee (three per cent) on the purchase of basmati for milling in Punjab during 2013-14.The measure was taken to encourage farmers to grow more basmati paddy instead of common paddy which is considered to be water guzzling, as basmati paddy consumes less water and is a short duration crop.
Besides, it also fetches more money to the farmers. The promotion of basmati is part of the State’s Diversification Plan to reduce area under paddy cultivation.
Earlier, the basmati exporters were required to pay these fees or 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 claimed difficulties in refund of fees or charges paid by them, as a result a large chunk of their working capital used to get stuck in transit, rendering the 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 — resulting in addition of 90 MT of fresh milling capacity of Basmati Paddy and projects worth Rs 700 crore approximately which were firmed up during Progressive Punjab Agriculture summit held in February 2014, were in the pipeline.
Apart from this, traditional Basmati rice shellers have also upgraded their mills to enhance their milling capacity.
During 2013-14, paddy was sown in about 28.51 lakh hectares, of which basmati paddy was sown in about 5.5 lakh hectares. “Given the drought like conditions in the State, the area under paddy has come down to 28.13 lakh hectares during kharif 2014. However, area under basmati paddy has increased to 8.6 lakh hectares. The last year’s basmati production was about 22 lakh MT, whereas the anticipated production during current season is about 34 lakh MT,” said government spokesperson.
He said: “Given the increase in basmati production, there are apprehensions that market price of basmati would be lower than the previous year as a result, the Government needs to encourage more buyers of basmati so as to ensure remunerative prices to the farmers.”
As of now, the Value Added Tax (VAT) is zero rated for all exporters of basmati who purchase basmati paddy from Punjab. “They can avail refund of VAT paid by them on the basis of existing documentation (H form) and there is no infrastructure fee on basmati purchase,” .He added that this relief for other buyers of basmati in Punjab is aimed to ensure competition in market for remunerative prices to the farmers.