Egypt is looking to import at least 1.5 lakh tonnes (lt) of rice from India through the rupee trade route in view of the difficulties it is facing to make payments in dollars, trade sources said.
“Egypt recently bought two ship loads of rice by paying in dollars. However, it faced tremendous difficulties in paying the money,” a source, who did not wish to be quoted, said.
Cairo now requires another six ship loads of rice that could total over 1.5 lt and has sought to make the payment in Indian rupee, the source said.
The development comes at a time when at least 19 countries, including the United Arab Emirates, Russia, Singapore, Germany, New Zealand and the UK, have agreed to trade in the rupee and give up the dollar as the cross-border transaction mode.
When contacted, BV Krishna Rao, President, The Rice Exporters Association (TREA), said exporters would be willing to take orders in the rupee route provided the Centre offers some concessions.
Forward premium
This is because exporters get a forward premium of 0.5 per cent to 1 per cent while trading in the dollar. “There are quite a few ways in which the government can compensate the traders for this,” he said.
Rao, however, said the Centre should facilitate export transactions in the rupee in the long-term interest.
Traditional relations
“The Centre should allow rice trade in Indian rupee to encourage Egypt which has had traditional commercial relations with India,” said a trade analyst from New Delhi.
Not just Egypt but the entire North African countries are facing currency problems, particularly with regard to the dollar. Trade sources said Egypt had been taking several measures to tackle dollar shortage.
Cairo has begun trade dealings with Russia in local currencies and plans to rope in India and China in this. It expects to save at least $1.5 billion through such trading with India, China and Russia.
On the other hand, Egypt cannot get a more competitive rice exporter than India. According to the Thai Rice Exporters Association, Indian 5 per cent broken white rice is quoted at $432-36 a tonne compared against $448-52 and $477 quoted by Vietnam and Thailand, respectively. Pakistan is offering the rice at $453-57.
Barter with rock phosphate
In the case of 25 per cent broken white rice, India offers it at $417-21, while Vietnam and Pakistan quote at $428-32. Thailand sells it at $468.
According to New Delhi-based trader Rajesh Paharia Jain, India can look at barter trade with Egypt by exporting rice and importing rock phosphate. “We are a net importer of rock phosphate and Egypt has ample quantities of the commodity. It can help meet our fertilizer requirements,” he said.
The trade analyst said exporters must think of cutting costs and look at process innovation in the short-term in the event of losing the forward premium they get while trading in dollars.
Data from the Agricultural and Processed Food Products Export Development Authority show that Egypt has imported 76,858 tonnes of rice between April and January this fiscal. It is the highest since it imported 1.3 lt of rice in the 2018-19 fiscal.
Export curbs
The demand from Egypt, which is not among the top buyers from India, comes at a time when India’s rice exports are picking up on demand from South-East Asia and Gulf countries.
During the April-January period of the current fiscal, non-basmati exports have increased to 14.56 mt valued at $5.16 billion compared with 14.01 mt valued at $5 billion in the year-ago period.
Rice exports have fared well despite the government imposing a 20 per cent duty on shipments of white and brown rice shipments besides banning fully broken rice consignments.
India curbed rice exports since September 8, 2022, as its rice production in the kharif season was feared to have been hit by deficient rains in key growing regions in the country’s eastern parts.
For the current crop year to June, the Ministry of Agriculture has estimated rice production at a record 130.84 million tonnes against 129.47 million tonnes in the last crop year.