The Hindu Business Line : Exporters urge Govt to disband Basmati Development Fund

The fund was set up after the Texas-based RiceTec Inc secured patents for basmati rice lines in 1997. The fund was set up on the initiative of the exporters themselves and it is being operated by the Agricultural and Processed Food Products Export Development Authority (Apeda). Besides fighting the patent case, the money accrued under the fund was used to fight a trademark case in Europe and undertaking development of market for the fragrant rice.

Initially, exporters contributed Rs 20 for every tonne of basmati rice exported. Later, it was increased to Rs 50 a tonne.

"Currently, the corpus of the fund exceeds Rs 35 crore and there are no cases for the Union Government to fight abroad. Therefore, we have suggested that the Commerce Ministry disband the fund," exporting community sources said.

According to official sources, the fund is necessary since basmati rice does not fall under the scheduled list of products for which Apeda can undertake promotional activities. A bill was prepared during the Vajpayee Government to bring basmati under the scheduled list but before any action could be taken, the Lok Sabha was dissolved.

However, exporter sources say that if basmati is brought under the scheduled list, they will have to pay 0.5 per cent of the export value as cess, which would be higher than what they pay currently.

"If that happens, we will have to pay a little over $4 or Rs 185 a tonne at the current price of $850 for premium basmati in the global market. We are not in favour of paying a higher amount for the fund. Also, since the corpus is swelling and as it is not being put to any good use, we want the cess to be cut to Rs 5 per tonne," the sources said.

Prices for brown basmati are currently being quoted at $675 a tonne.

While exporters have turned active in demanding a cut in the cess, they are also urging the Government to disband the fund and do something with the corpus.

Exporters have divergent views on what the Government should do with the fund. "One section of the exporters says that the fund should be deposited in the Consolidated Fund of India. It will help us to seek the Government help to fight cases such the patent for RiceTec," the sources said.

"There is another section which is demanding that the corpus be passed to the All-India Rice Exporters Association. But there is opposition to this, since the association is seen as a private body," they said.

The third suggestion being put forward is disbursal of the money in the corpus to the exporters' themselves in proportion to what they have contributed. "In future, if there is a need to take up a common cause, we can again resort to this pooling in of resources," the sources said.

Official sources declined comment on the demand.

One reason for the exporters pressing the Centre to act on the cess is that they don't foresee any problem with regard to basmati shipments now.

"Even the issue of the import duty levied by the European Union has come to an end," they said.

Basmati exports, which touched 8.5 lakh tonnes (lt) during 2000-01, have begun to stabilise and rise again. During 2003-04, exports totalled 7.10 lt valued at Rs 2,062 crore against 6.67 lt worth Rs 1,842 crore the previous year.

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