Mumbai: The Lok Sabha has approved a bill to abolish the cess on export of farm and dairy products such as butter, cereals, vegetables, fish and pulses. The Produce Cess Laws (Abolition) Bill, 2006, piloted by agriculture minister Sharad Pawar, repeals the Agricultural Produce Cess Act, 1940 and the Produce Cess Act, 1966.

Pawar said trade in farm products in international markets is getting increasingly competitive and it is essential to take measures for improving India''s competitiveness. "The cess acted as a tax on exports and the purpose of this bill is to encourage exports," he said during a brief discussion on the bill.

He said the abolition of the cess would not cause any great loss to the government as it was collecting only a very small amount of revenue through this. He said revenue from this score was Rs8.99 crore, which was possibly more than what the government spent in collecting it.

The Agricultural Produce Cess Act provided for a levy on articles such as butter, cereals (except rice and wheat which was recently removed), drugs, fish, fruits, vegetables, spices, sheep and lamb wool by way of customs duty on export.

The funds collected go to the Indian Council for Agricultural Research. Pawar said ICAR would receive additional funds as the finance ministry has enhanced budgetary allocation to about Rs1,200 crore this year Rs850 crore last year.