Haryana basmati exporters see fall in overseas demand

Struggling with the high Minimum Export Price (MEP) coupled with the export duty on basmati rice, exporters in Haryana are facing a fall in the demand of the rice variety overseas.

According to Sushil Jain, president of the Haryana Rice Exporters Association, slowdown in the demand of basmati rice in Europe and West Asia as well as the higher MEP have resulted in over 50 per cent fall in the demand of Indian basmati rice in export markets for the last few months.

Jain maintained that even as the area under basmati cultivation has increased by 30-40 per cent, the slowing demand of the basmati rice overseas due to higher prices has upset the export orders from India.

The MEP for basmati fixed at $1,200 per tonne coupled with an export duty of Rs 8,000 per tonne has made the Indian rice costlier in the global market in comparison to Pakistan’s basmati export.

As compared to the MEP of $1,200 per tonne plus the export duty on the Indian variety, Pakistan exports basmati rice at $800-900 per tonne, making its exports cheaper by at least $500.

Under normal circumstances, the difference is around $200 per tonne, with the Indian basmati rice enjoying a premium of $200. But now with markets in West Asia expanding, exporters rue that Pakistan’s basmati rice is being preferred over the Indian variety.

Vijay Setia, president of the All India Rice Exporters Association, added that the MEP on basmati rice was fixed in April by the central government as a step towards controlling inflation and ensuring availability of food grains in the country.

Even though inflation has come down significantly, the government has failed to revise the MEP of rice in proportion, leaving the Indian rice exporters in trouble.

Setia maintained that the declining export of Indian basmati would not only impact the exporters but also the millers and farmers.

In the wake of slackening demand of the basmati rice owing to higher prices, the exporters are not able to purchase rice from the millers and farmers, leading to a fall of 15-20 per cent in the prices of basmati rice varieties in the last few days.

Pradeeep Tayal, consultant to Haryana rice exporters, while suggesting relief measures for the rice exporters maintained that the government should revise the MEP of basmati rice so as to compete with the Pakistani variety. He demanded that the government should restore the DEPB/duty drawback to rice exporters that was withdrawn in April.