The Indian government has removed the $950 a tonne minimum export price (MEP) on basmati rice after coming under pressure due to falling paddy prices. According to senior government sources, the Commerce Ministry has sent a communication to the Agricultural and Processed Foods Export Development Authority (Apeda) to register basmati exports without any floor price. 

The Commerce Ministry said in its September 13 communication asked APEDA to take immediate action on registering exports without any MEP. However, it said Apeda will closely monitor export contracts for “any non-realistic prices for Basmati exports”.

On September 15, 2023, the Commerce Ministry asked Apeda not to register any basmati export contracts below $950 a tonne. The government had initially fixed the MEP at $1,250 before lowering it. The MEP was fixed to ensure that other varieties of rice, particularly white, were not shipped out of the country in the garb of basmati rice.

25% price dip

The government’s move follows representation from the exporters following an over 25 per cent decline in Basmati paddy prices. The decision has political significance since Haryana is going to polls next month and scrapping of the MEP will likely buoy exports.

According to Agmarknet, a unit of the Ministry of Agriculture and Farmers’ Welfare, the weighted average price of Basmati paddy prices is ₹2,565 a quintal compared with ₹3,475 a year ago. They had increased to nearly ₹4,000 later in 2023.

According to the Thailand Rice Exporters Association, Indian basmati is currently quoted at $990 a tonne against $965 offered by Pakistan. The removal of the MEP will now result in Indian basmati price being priced competitively in the global market. 

During April-May this fiscal, basmati exports increased to 9.65 lakh tonnes valued at $1.04 billion compared with 8.31 lakh tonnes valued at $917 million  in the year-ago period. 

‘Ensure bette returns for farmers’

“The government’s move to remove MEP is welcome. But exporters should ensure higher realisation to ensure farmers get increased income,” said S Chandrasekaran, a New Delhi-based trade analyst. 

According to Satish Goel, President, All India Rice Exporters Association (AIREA), the apex trade body of basmati exporters, the new Basmati crop is looking good. The rains have been good this year and farmers, who got good realisation last year, have increased the coverage of the fragrant rice. “The expectation is that the crop will be good this year and will increase by a minimum of 15-20 per cent,” he told businessline last week.

Other key decisions

Meanwhile, the government has revised the wheat stock limit for traders, wholesalers, retailers, big chain retailers and processors. The stock limit for traders and wholesalers has been cut to 2,000 tonnes from 3,000 tonnes earlier. 

While the limit for retailers remains unchanged at 10 tonnes, for big retailers it has changed to 10 tonnes per outlet at all their depots. For processors, it has been lowered to 60 per cent of their monthly installed capacity from 70 per cent earlier multiplied by the remaining months of 2024-25 fiscal. 

The government has also decided to extend zero import duty on yellow peas to December 31 from September 31 to tackle inflation and ensure stable prices of pulses during the festival period.

All these decisions, including removing $550 a tonne MEP on onion, were reportedly taken during Wednesday’s meeting of the Cabinet Committee on Prices headed by Union Home and Cooperation Minister Amit Shah.

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