Exports of basmati rice, the largest product in India’s agri export basket, in the current financial year are seen lower by around 5 per cent over last year’s level as shipments are disrupted following the outbreak of the coronavirus.
“The availability of containers is becoming difficult in India. Our exports are getting hit,” said Vijay Setia of Chaman Lal Setia Exports in Karnal and former president of All India Rice Exporters Association. “Our exports till January were lower by 1 per cent in volumes and about 10 per cent in dollar terms. Shipments in February and March have been hit. The overall shortfall in exports for the financial year 2019-20 is expected to be around 5 per cent in volumes over last year.”
Exports to Iran
The spread of coronavirus to Iran, the largest buyer of Indian basmati rice, accounting for about 30 per cent of the shipments, has triggered concerns among the exporters. Iran has purchased only 7.8 lakh tonnes till December end as as against 14 lakh tonnes in the previous fiscal.
The decline in shipments to Iran is attributed to issue of delayed payments. Payments owed by the Iranian buyers to Indian exporters stood at around ₹2,000 crore about six months ago, but the issue has largely been resolved now. “The situation has eased now and about 90-95 per cent of the payments have been made,” officials at the AIREA said.
Though the Rupee-Rial mechanism is in place, the deposits of Iranian buyers with the Indian banks – UCO Bank and IDBI Bank – have diminished after India stopped purchasing oil from Iran. “They don’t have much money in India. Their priorities have changed. They might be spending more on medicines now and rice becomes secondary,” Setia said.
‘Not much shortfall’
AK Gupta of the Basmati Export Development Foundation said the exports of the aromatic rice are likely to be maintained at last year’s levels. “We may see a maximum deviation of around 5 per cent,” Gupta said, adding that the demand for the Indian basmati was unlikely to go down. “Ultimately it is a food product. People will continue to buy,” he said.
An official at AIREA said it is too early to assess the impact on exports. “We have to wait and see how things pan out over the next couple of weeks,” he said.
Though shipments to Iran have stopped now, orders continue to trickle in from other countries. Indian basmati is purchased by 140 countries, Setia said. “There are small orders coming in from other countries. Saudi Arabia, the second largest buyer of the Indian basmati has purchased about 20 per cent more than normal during December-January and is now seen slowing down,” he said.
The slowdown in exports has resulted in easing of prices in the domestic market. “Basmati prices have gone down by 10 per cent for all varieties over the past 1.5 months,” Setia said.
Further, the spread of coronavirus to other countries, mainly in Europe, is also adding to the concerns of exporters. “The situation is getting serious and the uncertainty is increasing. As a result, the confidence of exporters will also diminish,” Setia said.