Transport subsidy for rice exporters stopped

new delhi: the government has halted reimbursement of the transportation subsidy on exported rice because of rampant swindling by exporters. from last week, fci has clamped down on reimbursement of transportation subsidy on rice being picked up at its inland depots after discoveringseveral instances where exporters were found to be misusing this subsidy. at least 6 lakh tonnes rice already procured by exporters from fci is likely to be affected. the subsidy scheme is now being re-worked and therefore, unlikely to be resumed shortly, officials said. fci will, however, continue to offer rice at port for interested exporters. that is not all. keen to encash the high prices in local markets, traders are also allegedly diverting large quantities of rice procured at bpl prices from fci specifically for export into the domestic market. the gains for rice exporters in such transactions is learnt to be as high as rs 2-2.50/kg. as the diversion is done after getting the necessary documents from foreign buyers to satisfy fci regulations, catching the culprits in this situation is likely to be more difficult. explaining the modus operandi of the transportation subsidy scam, official sources said under the policy, an exporter was allowed to move rice from fci godown to ports after first taking it to his mill for cleaning/bagging. the cost incurred in this transportation was then partly reimbursed by fci to help exporters reduce sale price. however, we found that exporters would lift rice from fci godowns and sell it in local markets near their mill. they would then buy the same quantity at port and claim transport subsidy. so a subsidy was being paid on bogus freight claims without any rice actually moving from fci inland depots to ports,'' they said. in some instances, exporters had not even booked freight for carrying rice to port. meanwhile, to enhance their gains, rice exporters are learnt to be offloading around 20 per cent of the rice meant for export in domestic markets. under the present policy, from every 100 t rice bought from fci, an exporter can produce up to 25 t brokens which they are free to sell locally provided they can showactual export of 75 t. in case an lc stipulates 5 per cent brokens, an exporter thus has to ship out 80 t rice and may sell the rest 20 t of brokens in the local market. as the local price of brokens is very low, the government did not fear misuse. however, industry sources say, it is now emerging that exporters are not cleaning/sorting the rice to take out brokens. instead, they are simply selling up to 20 per cent of the total quantity bought from fci at rs 5.65/kg in domestic markets at prices ranging between rs 7-8.50/kg. the rest 80 per cent is sent as it is to those foreign buyers happy with average quality rice. the exporter thus earns an extra rs 125 or $2.7 on every tonne of rice exported. to satisfy fci that only 80 per cent of the rice needs to be exported, traders are producing export orders stipulating 5 per cent brokens. on the face of it, it appears that india is exporting some very high quality rice with only 5 per cent brokens. but it is mostly a paper trail only to cover up the fact that 20 per cent of head rice has been sold off elsewhere. as the documentation is usually perfect, it is unlikely that perpetrators can be caught without the help of law enforcement agencies,'' sources said.

Transport subsidy for rice exporters stopped

NEW DELHI: The government has halted reimbursement of the transportation subsidy on exported rice because of rampant swindling by exporters.

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