Delay in notifying basmati MEP cut may dent exports

India may lose its market share in basmati rice exports if the government delays in notifying the cut in the minimum export price (MEP) to $800 a tonne, exporters warned.

The Empowered Group of Ministers (EGoM) is believed to have recently lowered the basmati rice MEP from $1,100 a tonne to $800 a tonne. However, the decision is yet to be notified by the Director General of Foreign Trade.

“If the delay continues, the global buyers would prefer Pakistan for contracting the premium basmati rice as the Indian variety is costlier,” a leading rice exporter said.

When contacted, former President of All India Rice Exporters Association Vijay Sethia said the government should immediately notify the reduced MEP so that exporters here can sign contracts with their clients.

At $1,100 a tonne MEP, Indian exporters realise Rs 52,800 a tonne at the current rupee-dollar value. To realise the same amount (Rs 52,800) in Pakistan, the basmati exporters can offer the grain at as low as $647 a tonne as the currency there is trading at above Rs 80 level against the US dollar.

Besides, Pakistani exporters have also left their traditional varieties for Pusa 1121, developed by Indian scientists.

India exported 1.5 million tonnes of basmati rice in 2008-09, compared with 1.1 million tonnes in previous year, according to the industry data. India and Pakistan are only two basmati rice producing countries in the world and any loss of the one would be the gain of the other.

Last year, India got upper hand by shipping Pusa 1121 as a basmati variety and captured all basmati markets with overwhelming response, Sethia said.

Many Indian exporters complained that realising the superiority of Indian rice variety, Pakistan has adopted the same Pusa 1121 in the name of ‘Kaynaat’ after dumping its traditional varieties. Pusa 1121 is the world’s longest rice having 8 mm length, expands to 18 mm after cooking.