ISLAMABAD: As Pakistan’s rice exports continue to decline, the Ministry of Commerce’s decision to allocate nearly Rs15 billion for a rebate on local taxes and levies has exposed sharp divisions within the exporting community, amid concerns over possible domestic price increases.
The incentive, introduced under the Drawback on Local Taxes and Levies (DLTL) scheme, is being promoted by the government as a support measure to enhance export competitiveness. However, critics argue that the rebate fails to address the structural weaknesses of the rice sector and could instead inflate domestic prices while benefiting stockists.
Rice Exporters Association of Pakistan (REAP) Chairman Faisal Jahangir defended the scheme, stating that the rebate would help Pakistani exporters compete with lower-priced Indian rice in international markets. He said rising input costs had eroded price competitiveness, making temporary relief necessary to retain market share. Mr Jahangir dismissed fears of domestic price hikes, insisting the measure was export-focused.
Under a commerce ministry notification, basmati and brown rice exporters are eligible for a 9 per cent rebate on the free-on-board (FOB) value, provided export prices are at or above $750 per metric tonne. Other coarse rice exports qualify for a 3pc rebate when prices remain below $750 per tonne.
Industry critics remain unconvinced. A Karachi-based exporter said Pakistan has repeatedly relied on short-term incentives since the 1960s, with little success in achieving sustainable export growth. In contrast, regional competitors such as India, China, Vietnam and Bangladesh have prioritised productivity, logistics and cost-efficiency reforms.
Exporters note that shipments declined after the removal of the minimum export price, as cultivation, milling, financing and tax costs rose. They warn that linking rebates to FOB values rather than export volumes may send inflationary signals into the domestic market, especially for basmati rice, pushing up paddy prices and burdening consumers without delivering lasting gains for exports.
