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India will continue to apply a minimum export price of $1,200 per tonne on basmati price to curb overseas shipments, according to a notification on Sunday, but the government is “actively reviewing” the floor price it had set in August based on requests by exporters, an official said.
Traders have protested the decision to maintain the floor price beyond October 15, which was first imposed in August to cool domestic prices. Exporters said they were losing markets because of the floor price and consignments from India had become unviable. A top exporters’ body called for a halt in overseas shipments.
The government continues to review the floor price it had set for basmati amid a dynamic situation, as new harvests have started arriving, which should lead to lower prices, a person aware of the matter said. Minimum export prices are aimed to make an item less competitive in the global markets by setting a threshold price below which overseas sale can’t be made. Basmati exports contracted above a value of $1,200 per tonne are allowed to be exported as usual.
Exporters had earlier held talks with the food and commerce minister Piyush Goyal. Based on representations from rice-exporting associations that a high minimum export price, technically called freight-on-board value, was adversely impacting shipments from India, the government is reviewing its decision.
The government will take a decision an “appropriate time” and until then the “current arrangement will continue”, the official cited above said, declining to be named. Minister Goyal had met basmati exporters last month and has ordered a review of the freight-on-board value, which is underway.
The All-India Rice Exporters Association, an industry body, asked traders to go slow in buying the long grain. “Members are advised to exercise extreme caution in the procurement and inventory holding of paddy as these are expected to significantly impact business viability and potential of basmati export at remuneration realization,” the lobby group said in an advisory.
The minimum export price has slowed down the export of one of India’s most sought-after, high-value export items. The country shipped basmati rice worth over $4.79 billion in 2022-2023, mostly to the Middle East and the US. In the April-August period, India had exported nearly 2 million tonne of basmati rice worth ₹2.2 billion, a 12% jump in value terms.
Justifying the curbs on basmati rice, the government had said in August that the new regulation was imposed after “credible information” that non-basmati rice was being shipped out using export codes and provisions that apply to the basmati variety.
The government has focused on bolstering domestic food stocks due to concerns of food output after a deficient monsoon. Cereal inflation has been in the double digits for over 12 months now, rising nearly 11% in September, according to official data.
Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.