Transport sops won’t last the distance

realising that freight subsidies are wto-compatible, the government has promised to partly reimburse the transport costs incurred by horticulture, floriculture, poultry, dairy and processed grain exporters. but the gains for exporters are unlikely to be immediate as the commerce ministry will need at least another three months to work out an acceptable formula. more importantly, export of these products are not lagging behind because of high transportation costs but due to unviable business models and poor quality. so while giving freight subsidy may be a convenient way to financially prop up exports for a while, it is unlikely to be the long-term solution necessary to significantly raise volumes. in fact, there is a strong likelihood that such announcements of intention to give sops may actually discourage exporters from signing fresh contracts in the short-term as they would prefer to wait for the subsidy to be announced first. in sugar, for instance, the government announced its intention to give a transport subsidy last year. but as it needs an amendment in the sugar development fund act by parliament in the current session, the subsidy has yet to be notified. “as a result, several millers who decided to wait for the subsidy formula lost out eventually because international prices fell meanwhile. so horticulture and meat exporters should simply carry on with their business instead of waiting for any government sops,’’ industry watchers said. till now transport subsidy is only being provided to wheat and rice exporters to make inland millers competitive in world markets. but its disbursement has not been particularly smooth as allegations of rampant misuse and corruption by rice millers actually forced fci to stop payouts for a while.