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G. Srinivasan

New Delhi, Nov 2

In the wake of decline in global prices of rice in recent months and the need to regain the lost market following a ban on export of non-basmati rice that includes premium and speciality rice varieties, the empowered Group of Ministers (eGoM) is meeting here on Monday to take a call on lifting the ban on premium non- basmati rice varieties.

Highly-placed sources in the Government told Business Line here that the eGoM under the chairmanship of the Union External Affairs Minister, Mr. Pranab Mukherjee, with the Ministers of Agriculture, Commerce and Finance and the Planning Commission Deputy Chairman as members, would meet to examine the possibility of opening of exports of various speciality rice varieties such as Joha from Assam, Ponni from Tamil Nadu and Karnataka.

Sources said the declining trend in inflation and slowdown of global economic locomotive with recessionary forces in the vanguard, the Government is understandably concerned that the slowdown of export growth would be damaging enough to fend for meeting the country’s import demand for essentials such as crude oil, besides widening the external deficit. The name of the game is, the sources said, promotion of exports for the purpose of stabilising the economic engine.

Trade policy analysts recall that during 2007-08, the domestic price of rice flared up and the Government was forced to clamp a ban on export of non-basmati rice effective from April 1, besides slapping a minimum export price (MEP) on export of basmati rice in order to contain the domestic spurt in rice price and ensure its availability. Currently, MEP of basmati rice is $1,200 a tonne or Rs 48,000 a tonne effective April 1, and there is also a customs duty of Rs 8,000 a tonne on export of basmati rice from May 10.

As a result of these policy-induced restrictions, export of non-basmati and basmati rice during the current fiscal up to October 21, was only 6.87 lakh tonnes and 5.44 lakh tonnes respectively, as against 31.44 lakh tonnes and 5.44 lakh tonnes respectively.

The 6.87 lakh tonnes of non-basmati rice this fiscal despite the ban, stemmed mostly from the Government contract to friendly countries to fulfil commitments made earlier.

Analysts argue that currently Thai Grade B rice is quoted around f.o.b. price $560 a tonne.

The depreciating rupee to the extent of 25 per cent this year so far has brought the f.o.b. cost of Indian rice around $375 a tonne.

Most southern States supply rice to public distribution system users at Rs 2 a kg by way of extending social safety net to vulnerable sections.

The widening gap between Indian rice prices and global market prices on top of the lower PDS price might foster clandestine trade in rice, if the authorities do not prescribe standards and inspection procedures, the sources said adding that the Government machinery is ill-equipped to check the export consignment even if non- basmati rice is shipped by errant elements in trade and industry.

Hence, as the eGoM is to take a call on opening up of speciality rice exports comprehensively, it needs to reckon certain checks and balances such as port restrictions, quantitative ceiling, packaging restrictions and allowing export cargo only through containers so that it is only exported in branded or retail packs and keeping a tab on export volumes, the sources added.

This would vastly help in preventing pilferage and export of common rice masquerading as premium varieties, they said.

More Stories on : Rice | Exports & Imports

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