The Commerce Ministry is in favour of abolishing the minimum export price (MEP) on aromatic basmati rice in the backdrop of non-basmati rice shipments being allowed without any price restrictions.
“There should be no MEP now. It might have made sense earlier when there was a ban on non-basmati exports. We now favour exports of both varieties having the same dispensation,” a senior Commerce Ministry official said.
Rice exporters have been persistently demanding that MEP on basmati exports be scrapped or be brought in line with the prevailing global prices, which have crashed in the past one year by 30-40 per cent from a high of $1,100 a tonne on higher output.
MEP reduced
At a recent Empowered Group of Ministers meeting, the MEP on basmati was reduced to $700 a tonne from $900 earlier.
The MEP was introduced a couple of years ago to prevent shipments of non-basmati rice in the guise of basmati exports. However, in the present scenario, where the basmati prices have crashed and shipments of non-basmati are allowed without any price curbs, the concept of MEP fails to hold any logic, the official said.
The Empowered Group of Ministers also decided to allow further shipments of non-basmati rice and review the shipments by late March. So far, over 2.3 million tonnes of non-basmati rice has been exported by India since the ban was lifted in September 2011.
The cut or elimination of MEP will help exporters boost shipments and achieve the targeted 2.5 million tonnes in the current financial year.
This is at time when payment delays from buyers in Iran (the largest market for Indian basmati exports) have made the exporters nervous. Iran accounts for about half India's basmati shipments, exported both directly and indirectly through Dubai.
A Delhi-based rice exporter said the cut in MEP to $700 a tonne was a fair move at this juncture as the prices of some of the 15 notified basmati varieties were ruling at that level and needed some support.