ISLAMABAD, May 29: The All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association has submitted proposals to the finance ministry for 2008-09 budget.

The proposals, a copy of which is released to the media, sought increase in the export of fruits and vegetables to $12 million from the current $2 million.

The association proposed to increase the 6 per cent mark-up ceiling to 12-14 per cent to support the establishment of cold storage and cool chain infrastructure for horticulture products.

It asked the policy-makers to introduce improved varieties, for instance, seedless mandarins, improving product quality, management of fruit flies in all fruits and vegetables, especially mango, guava and citrus, and management of kinno rind blemishes.

It has been suggested to improve orchard management practices (technology and training), improve post-harvest handling (cold chain, value-added products technology and training), etc. These measures will help in increasing the export value instead of targets.

The association asked for 6 per cent research and development (R&D) subsidy on export of fresh fruits and vegetables and declaring horticulture export as industry in the upcoming budget.

Machinery for processing of fruit is already under zero per cent tariffs under SRO 575 of 2005. Import of spare parts for fruit and vegetable processing machinery should also be made zero-rated either directly or under the recommendation of Pakistan Horticulture Development Export Board (PHDEB).

It has been proposed to allow duty-free import of hybrid seeds, plants and rootstocks, equipment for quality testing and assurance laboratories, tax holidays on local manufacturing of these machinery, equipment and materials, duty-free import of new and used (not older than 5 years) diesel/gasoline generator up to 20KVA, including import under personal baggage, gift and transfer of residence scheme.

It was also suggested that 0.75 per cent withholding tax should be charged on FOB value instead of C&F because freights (part of C&F) represent substantial portion of cost and is straightaway deducted from sale proceeds.

The association said that general sales tax (GST) is collected on many layers/stages of transaction. This increases cost and should be charged only once. For instance, the GST on packaging is charged on raw material for making cardboard, craft liner, cardboard box etc. Same is with other items.

It has been proposed to allow zero rated sales tax on electricity and gas to processing units of kinnos and mangoes, which are 100 per cent export-oriented or subsidised electricity (at par with domestic consumers) be allowed for packing houses, processing units and cold storages. Also, sales tax on electricity consumed in cold storages should be refunded.

According to the proposals, the utilisation period for users of Duty and Tax Remission on Export (DTRE) should be 24 months plus 6 months (with penalty), instead of existing 18 months plus 6 months. This is necessary as kinno cartons cannot be consumed in mangoes and vice versa and, therefore, practical time for consumption is only one season.