India agrees to decrease minimum price for basmati rice exports to $950 per tonne
Published on: October 24, 2023.
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The Indian government has decided to reduce the minimum export price (MEP) for basmati rice shipments from $1,200 to $950 per tonne, according to official sources. The Commerce Ministry will register basmati rice exports with a value of $950/tonne and issue registration-cum-allocation certificates. Commerce Minister Piyush Goyal agreed to lower the MEP during a virtual meeting with exporters organized by the All India Rice Exporters Association (AIREA). The Directorate-General of Foreign Trade is expected to release the order soon.
Previously, exporters, led by AIREA, had boycotted basmati rice procurement from agricultural produce marketing committee (APMC) yards. However, they withdrew the boycott following an assurance from the Centre that it would consider reviewing the MEP. Exporters had been demanding a MEP of at least $900 per tonne. Earlier, Goyal had indicated that the floor price for basmati rice exports would be reduced to $850, but that did not happen.
The MEP was implemented to address the issue of misclassification and illegal export of non-basmati white rice. It was reported that non-basmati white rice was being exported under the HS code of Basmati rice. Non-basmati white rice exports have been banned since July 20, while parboiled rice exports attract a 20% duty.
Some traders believe that a price range of $905-1,000 per tonne for basmati rice is suitable, while others argue that it should not be lower than Pakistan’s MEP of $1,102. Exporters are concerned about offering basmati rice at a lower price than Pakistan, as it may affect the premium status of Indian basmati rice.
Currently, basmati varieties such as 1121 and 1509 are available in the market. The Pusa basmati variety will be available soon, while pure basmati rice is expected to arrive in December. Some growers believe that this year’s basmati crop may have a lower yield, but traders argue that the standing crop on farms looks healthy.
Exporters have been urging for a reduction in the MEP, as they believe it is impacting the shipment of basmati rice. According to the Thailand Rice Exporters Association, Indian basmati rice is currently priced at $1,220 per tonne. APEDA data shows that basmati rice exports from April to August for the current fiscal year were 2.01 million tonnes, valued at $2.23 billion, compared to 1.88 million tonnes, valued at $1.96 billion, in the previous year.
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