Even as the Indian government has fixed a minimum export price (MEP) of $1,200 a tonne for basmati rice, experts in the sector say it is time for the Centre to set right an anomaly that has continued since 2003.
In 2003, the Centre came out with a notification which permitted exports of basmati rice blended with 15 per cent non-basmati rice. Such exports are allowed now too and along with the MEP, the government can look at setting it right too by deleting the clause, experts say.
“In 2003, the basmati rice industry was unregulated. Since the sector was particularly in transition, this specification existed. Also, it was in a preparatory stage to enter the register of Geographical Indication (GI),” said an expert, who did not wish to identify.
Not treated as a niche item
The regrettable aspect with regard to basmati is that it is treated as a commodity rather than a niche product, said S Chandrasekaran, who has authored “Basmati rice: The natural history and Geographical Indication”.
In dollar terms, basmati prices have been at a standstill or any rise has been negligible over the past two decades. “The current global rice market environment offers an opportunity to reposition the quality and price of basmati,” he said.
Experts say blending of basmati with non-basmati should not be allowed particularly when the Indian fragrant rice is a niche product and its quality is paramount. “With MEP being fixed, this is the right time to do away with blending,” the expert said.
Chandrasekaran said the $1,200 a tonne MEP is nothing new to the market as India had fixed the same price in 2008.
FSSAI fiat for domestic market
Pointing out that the Food Safety and Standards Authority of India (FSSAI) has scuttled the efforts to introduce “blended Basmati rice” for sale in the country by deciding not to accede to a proposal that has been in the works since 2017, experts said the same should apply to exports also.
Then, Chandrasekaran said: “The FSSAI decision basically will protect the purity of basmati rice and not allow any dilution, given the geographical indication (GI) tag for it.”
There are two benefits from the Centre taking a decision to not allow blended basmati exports. One, it will ensure higher demand for basmati paddy and thus, growers will stand to gain.
Second, it will also stop shipments of non-basmati rice in the blended basmati consignments. “Let’s say for example, we export 40 lakh tonnes (lt) of basmati rice. Of this, the non-basmati blend will make up 6 lt. By stopping blended basmati exports, these 6 lt can be retained in the domestic market,” the expert said.
Saudi’s 2008 subsidy
One curious aspect that some traders point out is that while basmati rice costs nearly ₹200 a kg, the exported variety is less than ₹100. “No doubt, the Government provides a $100/tonne subsidy but the fragrant rice is headed to petro-dollar countries. These nations can offer a higher price for Indian basmati,” said a trader on the condition of anonymity.
Chandrasekaran said in 2008, Saudi Arabia offered a subsidy of $257 a tonne to its citizens for purchasing basmati rice. “Even Thailand Jasmine rice allows the maximum presence of only 8 per cent other varieties of rice,” he said.
Experts point out that with the Centre imposing a 20 per cent export duty on parboiled rice, the difference between Indian and Thailand rice of the variety shrunk to $15 a tonne.
“Thailand would prefer to sell its rice at a premium of at least $50 to the Indian rice. So, Thai parboiled prices are now headed to $700,” the expert said.
Unit value down
If Basmati MEP is fixed at $900 a tonne as demanded by a section of exporters, then the prices will be equivalent to Thai common parboiled rice. “India should try and ensure its Basmati enjoys a premium in the rice market,” the expert said.
According to the Agricultural and Processed Food Product Export Development Authority (APEDA), India exported 45.60 lt of basmati rice in the 2022-23 fiscal. During the April-June period of the current fiscal, it has exported 11.72 lt of basmati rice against 11.25 lt in the year ago period.
However, the fragrant rice has fetched a value of $1,029 a tonne in the first quarter of the fiscal against $1,107 a year ago.