With Pakistan putting the minimum export price (MEP) of basmati at $1,050 per tonne, India is considering reducing the MEP on basmati rice by $200-300 from the $1,200 a tonne so that Indian exporters of the aromatic rice do not lose out in the global markets to the neighbouring nation, trade sources and a government official said.
Also, ahead of the Lok Sabha elections next year, the government would not want to face the wrath of farmers from Punjab, Haryana and Western Uttar Pradesh who are staring at a loss of Rs 10,000 per acre due to India fixing the MEP at $1,200 per tonne. Prices of the newly harvested basmati rice have crashed by Rs 400 per quintal after the government announced the minimum export price.
Trade sources said commerce minister Piyush Goyal had a virtual meeting with basmati exporters Monday where it was stressed by the industry representatives to bring down the MEP to $850 per tonne. “It is likely that the ministry might issue an order by Wednesday or Thursday on the same,” said a member of the All India Rice Exporters Association, who attended the meeting, but did not want to be named. Industry associations had already met thrice a committee set up by the government and headed by the chairman of the Agricultural and Processed Food Products Export Development Authority (APEDA), and sought a reduction in the MEP.
“While the final decision has not been taken, it is under consideration,” said a senior official in the government. Several varieties of basmati are grown only for export and not for domestic consumption, said the official, adding that allowing export of such varieties would not have any price impact on the domestic market.
In August, the government prohibited the export of basmati rice below $1,200 per tonne to prevent potential instances of “illicit” shipment of regular white non-basmati rice disguised as high-quality basmati rice. It also kept sub-$1,200 contracts in abeyance and asked the APEDA to set up a committee to evaluate and study the matter.
Suraj Agarwal, chief executive of RiceVilla, a rice marketing and exporting company, said: “Current MEP of $1,200 per tonne (Rs 100/kg) is comparatively higher than the average export price of $950 tonne (`80/kg). The new crop of basmati, which is known as 1509 variety, has started to arrive and if we don’t book export orders at this point, our only competitor in basmati rice — Pakistan, who has set its MEP at around $1,050 — would improve their share in the global markets.