Decision to lower basmati export price raises eyebrows

At a time when India’s kharif crop has been hit hard by the weak monsoon and production of rice, a staple food grain, is seen down by almost 10 million tonnes, the government’s decision to lower the minimum export price (MEP) of basmati raises questions.

The empowered Group of Ministers on food security earlier this month decided to lower the MEP of basmati to $800 a tonne from $1,100. The decision is yet to be notified.

MEP for the commodity had been introduced last year when a surge in exports had led to price rise. The initial MEP of $1,200 a tonne was reduced to $1,100 a tonne in January, but exporters had sought a further cut due to stiff competition from Pakistan, which has been eating into India’s export market.

“Finally, our request for lowering the basmati MEP has been heard, but I can’t say if exports are going to improve drastically as Pakistan has already taken over Indian export markets,” Anil Mittal, CMD, KRBL, India’s largest basmati rice exporter, said. He said Pakistan, which did not have an export floor, took advantage of India’s high selling price, and sold basmati at much cheaper rates, taking over West Asian markets that were traditionally the stronghold of Indian exporters.