EDF Board refuses to give additional subsidy to DEPO

The Export Development Fund (EDF) Board headed by the Commerce Minister has reportedly refused to give additional subsidy of Rs 311 million to the Defence Export Promotion Organisation (DEPO), well-informed sources told Business Recorder. The DEPO, sources said, had requested outstanding balance amount of Rs 311 million on account of subsidy for IDEAS 2012, 2014 and 2016 be settled at priority.
The organisation argued that deduction of Rs 18.36 million was unjustified from approved funds of Rs 70 million for IDEAS-2016 and urged the Commerce Ministry to reimburse the remaining amount. The sources said, Minister for Deference Production, Rana Tanvir Ahmad had also held a meeting with the Minister for Commerce and requested him to continue subsidy for defence exhibitions. "Conditional approval of Rs 70 million for IDEAS-2016 be reviewed and amount be approved without any condition," the sources quoted DEPO as saying in its communication.
The sources said EDF Board in its meeting held on January 24, 2018, showed serious concern over the recommendations forwarded by DEPO in their current proposal. The members recalled that it was communicated to DEPO that there was no concept of outstanding liabilities on part of EDF, the sources further added. The EDF Board members noted that R s 70 million was approved subject to provision of an undertaking by DEPO that it would not ask for funds from EDF in future despite the fact that the Board had earlier made a decision that no funding would be made to DEPO from EDF.
The sources said the Board referred the proposal to Finance Committee to examine it. The DEPO argues that it organised IDEAS 2012 and 2014 and 2016 successfully. The event manager in 2012 and 2014 was the professional firm M/s Badar Expo Solutions, adding that IDEAS is an international defence exhibition/seminar which attracts not only local manufacturers but also foreign firms.
In order to promote local defence industry, DEPO provides them space at concessional rates, ie, 50 percent less as compared to the international exhibitors for which as per government policy Commerce Ministry allocates an amount equal to the subsidy given to local manufacturers.
Defence Production Ministry maintained that DEPO has been allocated Rs 60 million by the Commerce Ministry against the subsidy of Rs 125 million given to the local manufacturers in IDEAS 2012 leaving an outstanding amount of Rs 65 million. In case of IDEAS 2014, against total subsidy of Rs 130 million an amount of Rs 60 million was allocated by the Commerce Ministry with an amount of Rs 70 million still outstanding.
The MoDP had also sought an outstanding amount of Rs 135 million from the Commerce Ministry. However, Commerce Ministry had rejected the claim of MoDP, saying that since defence production's exports are not part of regulated exports, there is no justification for any subsidy. However, the DEPO officials maintain that some of the companies which export defence equipment contribute towards Export Development Surcharge (EDS).
Commerce Ministry as well as the EDF Board has invariably expressed dismay at the subsidy demanded by DEPO for IDEAS but the organisation uses different powerful sources to get the subsidy.