Government Reduces Basmati Rice Export Floor Price to $950 per Tonne
Published on: October 24, 2023.
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The Indian government has recently decided to reduce the minimum export price (MEP) for basmati rice following complaints by traders that overseas shipments had become unviable. In August, the government imposed a floor price of $1200 per tonne for basmati rice exports to cool domestic prices. However, after receiving feedback from farmers and exporters about the high floor price making Indian consignments uncompetitive, the government has approved a decision to reduce the MEP to $950 per tonne.
This move comes as India has been losing market share to Pakistan, which also produces the premium rice variety. Traders have raised concerns about the declining competitiveness of Indian basmati rice in the global market. As a leading exporter of basmati rice, India ships over 4 million tonnes annually, primarily to West Asian countries. Saudi Arabia, the United Arab Emirates, Iraq, Iran, and the US are some of the largest importers of Indian basmati rice.
The MEP serves as a price threshold below which exporters are not allowed to sell to global buyers. It is implemented to limit exports and regulate prices. In addition to basmati rice, India has also banned overseas sales of white non-basmati rice and wheat to control local prices.
Based on representations from rice exporters’ associations, an interministerial committee was assigned the task of reviewing the floor price. The committee aims to address the concerns raised by traders and ensure a more favorable trade environment for basmati rice exports.
In the current fiscal year (2022-2023), India has shipped basmati rice worth over $4.79 billion, primarily to West Asia and the US. However, shipments significantly slowed down after the MEP was implemented in August.
This decision to reduce the MEP for basmati rice exports is expected to boost the competitiveness of Indian consignments in the global market and help regain market share from Pakistan. The government’s proactive approach in reviewing and adjusting the MEP demonstrates its commitment to supporting the agricultural sector and promoting trade.
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