ISLAMABAD: At a time when rice exports are steadily declining, the Ministry of Commerce has allocated around Rs15 billion for a rebate scheme on local taxes and levies for rice exporters, raising concerns about a potential rise in domestic prices. Exporters remain divided over the government's decision, which has been presented as a support measure for the sector. Several industry players, however, argue that the move fails to address the structural problems confronting rice exports and instead risks shifting the burden onto domestic consumers.

According to Rice Exporters Association of Pakistan, the Drawback on Local Taxes and Levies (DLTL) scheme is intended to lower export prices and improve Pakistan’s ability to compete with global suppliers. Faisal Jahangir, Chairman of the association, stated that Indian rice is currently being offered at significantly lower prices, making it difficult for Pakistani exporters to maintain their foothold in international markets. The rebate is expected to help exporters maintain market share amid intense competition, although critics warn it could push up domestic prices.

A notification issued by the commerce ministry indicates that exporters of basmati and brown rice are eligible for a rebate of 9 percent of the free-on-board (FOB) value, provided the export price is equal to or above $750 per metric tonne. Other coarse rice qualifies for a lower rebate of 3 percent of FOB value, but only where the export price remains below $750 per tonne.

A Karachi-based rice exporter expressed concern over the policy, highlighting that Pakistan’s bureaucracy has a history of relying on short-term measures such as rebates and subsidies. These incentives have not led to sustained growth, leaving exports largely stagnant, while regional competitors have focused on structural reforms to improve productivity and cost efficiency.

Exporters have noted that rice exports have declined since the removal of the minimum export price due to higher cultivation, milling, financing, and tax costs. They argue that sustainable price competitiveness can only come from higher output and productivity, rather than rent-based incentives that encourage speculative behavior. India is cited as an example, where rice prices have declined due to higher production and improved yields.

Some exporters warn that the rebate could increase domestic rice prices, benefiting stockists while squeezing consumers. The linkage of rebates to FOB values rather than export volumes is seen as sending a price signal back into the domestic market, potentially pushing up paddy procurement rates, particularly for basmati rice.