The Hindu Business Line : EU tightens basmati import norms

The precedent
The European Commission's latest regulation requires that future shipments have to be officially certified as basmati in order to be eligible for zero import duty.
The regulation entitles the EU member countries to conduct random checks and send samples for DNA-based variety testing.

New Delhi July 3, In what may set a precedent for export of other agro-commodities as well, the European Union (EU) has mandated all duty-free basmati rice shipments from India to be accompanied by DNA analysis-based `authenticity certificates'.

The new regulation would take effect from July 1.

Currently, brown (husked) rice entering EU attracts a general import duty of 42.5 per tonne. For basmati exported from India and Pakistan, there is a duty `derogation' (concession) of 65 , effectively translating into a nil rate of duty. The underlying logic in this case is that basmati, being a premium variety (similar to Scotch whiskey), does not compete with normal rice and hence will not threaten the interests of European farmers.

Official certification

But the European Commission's (EC) latest regulation No. 972/2006, dated June 29, requires that future shipments have to be officially certified as basmati in order to be eligible for zero import duty. And that means furnishing "a product authenticity certificate issued by a competent body in the exporting country". For India, the `competent body' would be the Export Inspection Council (EIC) in the Ministry of Commerce, while for Pakistan, it is the Trading Corporation of Pakistan Ltd.

"Since the EIC lacks the in-house expertise, it would have to get the tests done through the Centre for DNA Fingerprinting and Diagnostics, Hyderabad," official sources said.

The new regulation entitles the EU member countries to conduct random checks on consignments and send samples for DNA-based variety testing to their laboratories. There would be no duty derogation "if the results... show that the product analysed does not correspond to what is indicated in the authenticity certificate."

Testing norms

Significantly, the EU and India are yet to evolve common testing protocols and standard markers for identifying `authentic' basmati. "In the absence of commonly accepted testing norms, this provision gives scope for unilateral action. This could affect our exports,", the sources added.

As of now, there are six `traditional' (Basmati-370, Basmati-386, Dehraduni, Taraori, Basmati-217 and Ranbir Basmati) and two `evolved' varieties (Pusa Basmati-1 and Super) qualifying as basmati for export from India. Pakistan has likewise notified four varieties: Kernel and Basmati -70 (`traditional') and Super and Pusa (`evolved').

The country annually exports around 1.8 lakh tonnes of basmati rice to the EU, which is worth over Rs 500 crore. Roughly 40 per cent of this is accounted for by Tilda Riceland Ltd. The other players include Amira Foods, Sunstar Overseas, LT Overseas, Bush Foods, Picric Ltd, Pepsi Foods and Satnam Overseas.

"Mandatory DNA analysis and authenticity certification could in future be extended to other products, where there are geographical indication-based claims. Today, it is basmati; tomorrow, it can be Darjeeling tea or Malabar pepper. All these would eventually raise transaction costs,", the sources pointed out.

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