Pakistan and Sri Lanka Clash Over Basmati Trade Quota Usage under Free Trade Agreement
Published on: January 11, 2024.
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Pakistan and Sri Lanka are currently facing a dispute over basmati rice exports. Pakistan, under a free trade agreement with Colombo, has been given a quota of 6,000 tonnes for shipments, but has been unable to fully utilize it. This issue has brought attention to the inclusion of Indian basmati variety 1121 in the list of allowed varieties from Pakistan. Pakistani trade sources suggest that India should question the inclusion of 1121 basmati in Pakistan’s list.
One of the main reasons for Pakistan’s failure to utilize its full quota is the delay in clearing the rice shipments by Sri Lanka. Sri Lanka has concerns about possible adulteration of the fragrant rice exports from Pakistan. Pakistan authorities have expressed their dissatisfaction with Colombo’s testing procedures, arguing that their rice consignments are certified by three different organizations, including the certificate of origin. The Batalagoda Rice Research and Development Centre in Sri Lanka has been responsible for clearing the consignments, but recently the clearance has been delayed beyond what Pakistan considers reasonable.
There are two main issues contributing to the dispute. First, Sri Lankan authorities are not satisfied with Pakistan’s testing protocols for the fragrant rice before it is shipped to Colombo. Pakistan has been hesitant to share the details of its testing protocol. Second, the prices of the rice exported to Sri Lanka are lower than the prevailing global market rates, raising suspicions of possible adulteration. This also involves health concerns related to potential adulteration.
Meanwhile, trade sources suggest that India has a case to protest against the inclusion of the 1121 variety in the Sri Lanka-Pakistan FTA list. The trade sources argue that the 1121 variety is completely Indian, even though Pakistan may call it 1121 Kainat. India can take advantage of Pakistan’s dispute with Sri Lanka in the global market, particularly in the European Union and the Gulf, to expand its presence in these regions.
In the first half of the current fiscal year, basmati rice exports from India increased to 2.6 million tonnes (mt) valued at ₹2.61 billion, compared to 2.41 mt valued at ₹2.55 billion.
For more information, please visit the source article on The Hindu Business Line: “Pakistan, Sri Lanka tussle over Basmati exports” here.
