Pakistan duty drawback benefits may spoil India’s Basmati party
Pakistan plans to extend duty drawback benefits for Basmati rice exporters beyond June after the scheme boosted exports. Indian exporters fear Pakistan’s lower export benchmark price of $750 per tonne could pressure global Basmati prices and reduce export realizations for Indian traders.
Pakistan plans to extend duty drawback benefit to its Basmati exporters beyond June, as it has helped improve shipments of the aromatic rice. The benefit was introduced in late January. But Indian exporters are worried about a dip in realisation in global market due to lower rates offered by Pakistan. This comes at a time when they were expecting normalisation of trade with West Asia after reopening of the Strait of Hormuz.
Pakistan’s Ministry of Commerce on January 23 issued an order providing benefits of drawback of local taxes and levies collected from the rice sector until June 30. Per the order, Basmati exporters are eligible to claim 9 per cent of the f.o.b (free-on-board) value of the exported rice if they ship the aromatic variety at $750 per tonne or more. The rate is 3 per cent of the f.o.b value if exported below $750 a tonne.
“The order actually helped Pakistan to improve its Basmati export, even if it is much less compared to India. But the problem is such a low rate of $750/tonne fixed by it becomes a benchmark internationally when Indian rice exporters negotiate deal,” said a leading Basmati exporter. He said the extension of this duty drawback benefit order for another six months, if approved, will not be in favour of Indian trade, not for the benefit of Basmati as a brand.
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Source : The Hindu Businessline
