In order to continue basmati cultivator interest and encourage crop diversification in the state the Punjab government has offered incentives to the basmati buyers from outside the state.

Punjab Chief Minister Prakash Singh Badal on Tuesday has announced to continue to offer incentives to the basmati millers as 2013-14 to continue, along slashing both the market fee and rural development fee by one per cent in order to motivate the buyers from outside the state.

Punjab government has given concession in the mandi fee, rural development fee, infrastructure fee to the buyers on purchase of basmati for milling in Punjab during 2013-14.

Punjab government used to take 2%, 2%, 3% fee respectively from the basmati buyers for mandi fee, rural fee and infrastructure charges which it has waived in 2013-14.All such measures was taken to encourage the Punjab farmers to grow basmati rice rather than common paddy which require more water.

Earlier to this relaxation the basmati rice exporter of Punjab has to pay these charges/fees which are refundable as there is no tax on the export of goods from Punjab. But the Punjab millers said that there is difficulty in the gaining of these refundable fees as a result of which large chunk of their working capital used to get stuck in transit, rendering milling in Punjab uncompetitive.

By this relaxation, the government has not only promoted the basmati cultivation in the state but also to promote investment in rice-milling industry.

In the year 2013-14 paddy cultivation occupy the area of 2.85 million hectares, of which basmati paddy was sown in about 550, 00 hectares.