The Hindu Business Line : ‘15 changes to basmati export norms in 8 months’

Mumbai, May 13 An export duty of Rs 8,000 a tonne on basmati rice ($200 a tonne) will hit both the exporters and 10 lakh marginal farmers in Punjab, Haryana, Western Uttar Pradesh and Uttranchal.

Mr Vijay Setia, President, All India Rice Exporters Association, said: “The Government has made 15 amendments to basmati rice export norms since October 2007. Such frequent changes will only send wrong signals to the international trading community.”

Lowering minimum export prices to $1,000 a tonne from $1,200 will not have any impact as exports are stuck at much higher price after adding up other incidental cost, said Mr Setia.

Impact

Of the 1.5 million tonnes exported annually from India, about 60 per cent have been shipped, while the remaining has already been contracted.

“The export duty will increase the cost on exporters and lead to unnecessary litigations over who will bear the extra burden,” said Mr Setia.

India exports about 80-90 per cent of the total production as the domestic demand is low.

The Government on Monday notified the changes announced by the Finance Minister, Mr P. Chidambaram, while replying to a debate on the Finance Bill in the Lok Sabha last month.

“The margins of exporters of this item have been rising as a result of buoyancy in international prices,” Mr Chidambaram had said.

Farmers to be hit

The Government has already banned exports of non-basmati rice.

The export duty translates to Rs 5.36 a kg on basmati paddy, which translates to 21 per cent tax on farmers — the highest tax ever on any agriculture commodity, said an analyst. Imposition of the duty will escalate export price by 20 per cent in the short run. For every one per cent increase in export price, the demand drops 0.58 per cent, he said.

In 2006-07, export prices rose 21 per cent and demand fell 10 per cent, reveals an Agriculture and Processed Food Products Export Development Authority (APEDA) data.

The price of basmati paddy has gone up from Rs 13,000 a tonne in 2005 to Rs 25,000 a tonne in 2007. “The income of basmati paddy has increased to the tune of 100 per cent in the last two years. The basmati paddy farmers were getting 75 per cent of value of the exports,” said Mr Karan Singh, an exporter.

The fall in export demand of basmati rice after implementation of export duty is likely to reduce the demand in the forthcoming kharif season. The prices may come down by Rs 10,000 a tonne in the kharif season due to fall in export demand, said Mr Singh.

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