EDF Board approves Rs 92.75 million DLTL for export of Kinnow to Russia

The Export Development Fund (EDF) Board headed by Minister for Commerce and Textile, Pervaiz Malik has approved Rs 92.75 million as Drawback of Local Taxes and Levies (DLTL) for export of 3,500 containers of Kinnows to Russia, official sources told Business Recorder. The decision was taken at a recent meeting of the Board held in the committee room of the Commerce Division.
Aslam Pakhali, Chairman of Pakistan fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) briefed the EDF Board that fruit and vegetable trade had significant worldwide market as per Pakistan Bureau of Statistics (PBS), Pakistan's export of the sector stood at $ 460 million during 2015-16, thus Pakistan's share was 0.6 percent of global trade.
He argued that horticulture sector had great potential to raise its contribution to the country's foreign exchange earnings but Pakistan was losing the Russian market at a fast pace; he added that exporters suffered huge losses in Russia in 2016-17 and it was unlikely that exports would be possible in the current season starting December 2017; and if this happens then Pakistan will lose its largest Kinnow export market.
The Association further argued that the size of Kinnows this season was relatively small as compared to previous seasons due to little rainfall and other climactic conditions, adding that small Kinnows may not be easily exportable elsewhere, except Russia, which was the only market in the world which accepts the small-sized Pakistani Kinnow, ie, smaller than 60 MM.
The representative recommended that in order to save this export market, immediate steps need to be taken, and one feasible option was to provide 100 percent freight subsidy to exporters of Kinnows to Russia for two years, ie, 2017-18 and 2018-19.
Secretary EDF Board informed the members that the proposal was considered by the Finance Committee in its 12th meeting held on January 5, 2018 in which the committee did not recommend the Board to approve freight subsidy as requested by the Association, however, in order to support the export of Kinnows to Russia, a Drawback of Local Taxes and Levies (DLTL) @ Rs 250 per container was recommended to the Board for approval for this season alone.
The Board members pointed out that it was not advisable to use the word "subsidy" as the proposal must be aligned with WTO laws and nomenclature. The members also discussed effects of the proposal on domestic price of Kinnows. In response to the query raised by the Minister for Commerce and Textile, it was stated that there were no quarantine issues.
The representative of PFVA said that all economic agents in the entire supply chain of Kinnows would benefit from the proposal, especially economies of Sargodha and Bhalwal.
All Board members and CEO PHDEC supported the proposal. In response to the query as to whether DLTL was a valid charge on EDF, it was stated that the proposal was justified under all of the three objectives mentioned in section 4 of the EDF Act 1999. After detailed deliberation, the Board approved Rs 92.75 million @ $ 250/container for 23,500 containers DLTL on export of Kinnows to Russia for this season only.