The Indian government has agreed to lower the minimum export price (MEP) for basmati rice shipments to $950 a tonne from $1,200 fixed on August 25, official sources said.

The Commerce Ministry has decided to register basmati rice exports with shipments value of $950/tonne for issuing registration-cum-allocation certificates, the sources, who did not wish to be identified, said.

An exporter source said Commerce Minister Piyush Goyal had agreed to cut the MEP to $950 at a virtual meeting with exporters held under the auspices of the All India Rice Exporters Association (AIREA).

Also read: US asks India to lift export ban on non-basmati rice

The Directorate-General of Foreign Trade will come out with the order soon, the sources said. 

Traders withdraw boycott

On October 20, exporters led by the AIREA withdrew their boycott of basmati rice procurement from agricultural produce marketing committee (APMC) yards following an assurance from the Centre it could consider reviewing the MEP.

The exporters have been demanding that the MEP be cut to at least $900 a tonne. A month ago, Goyal had told a virtual meeting of exporters that the floor price of basmati rice exports would be cut to $850.

However, it did not happen and the Centre issued a statement that the $1,200 MEP would be in place “until a decision is taken on the free-on-board value”

Tackling ‘illegal exports”

The statement said the MEP was necessitated as the government “received credible field reports regarding misclassification and illegal export of non-basmati white rice”. 

“It had been reported that non-basmati white rice was being exported under the HS code of Basmati rice,” the Centre said. Exports of non-basmati white rice have been banned from July 20, while shipments of parboiled rice attract 20 per cent export duty

A section of the trade feels $905-1,000/tonne for basmati rice is working, while another says it should not be lowered than Pakistan’s MEP of $1,102. 

“We cannot afford to offer basmati at a lower price than Pakistan since we command a premium,” said an exporter, who did not wish to be identified.

Growers fear lower yield

Currently, basmati varieties such as 1121 and 1509 varieties are arriving in the market. The Pusa basmati will hit the market soon, while pure basmati will likely arrive in December. 

A section of the growers told businessline that this year the basmati crop may be affected with the yield likely to be lower. However, traders say the crop should be good with the standing crop on farms being healthy.

According to the Agricultural and Processed Food Products Export Development Authority (APEDA) survey last year, basmati was cultivated on 16.31 lakh hectares across the country.  

Also read: India permits export of 10.34 lakh tonnes rice to 7 countries

Exporters have been demanding the lowering of MEP saying it was affecting shipments. According to Thailand Rice Exporters Association, Indian basmati rice is quoted at $1,220 a tonne currently.  

According to APEDA data, basmati exports during April-August of the current fiscal year were 2.01 million tonnes (mt) valued at $2.23 billion compared with 1.88 mt valued at $1.96 million a year ago.