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As cheaper rice from countries such as China and Thailand begins to eat into India’s traditional markets in Africa, the concerned rice exporters here are looking to the government for incentives to sustain their markets.
An increase in minimum support price (MSP) for paddy, coupled with strengthening rupee against the dollar, has turned the Indian rice expensive in the world market, hurting the non-basmati rice shipments, exporters said. Provisional data for shipments made during April-May this year indicate that exports have more than halved over same period last year.
Non-basmati rice shipments fell to 7.11 lakh tonnes during April-May this year from 15.25 lakh tonnes in the corresponding period last year. In value terms, the shipments slumped to $294 million from last year’s $652 million. This is even as the basmati shipments have witnessed a steady growth in the same period.
Plea for support
“The government should consider extending the 5 per cent incentive under the MEIS scheme and also extend the 5 per cent interest subvention scheme to non-basmati rice exporters,” said BV Krishna Rao, President of the Rice Exporters Association, which has written to the Commerce Ministry recently. Such incentives will help the Indian rice exports remain competitive.
The 5 per cent incentive under MEIS, introduced for non-basmati rice exporters in November last year, ended in March this year. For being among the top five exports category, the non-basmati rice exporters are not considered for the interest subvention scheme.
Chinese entry
At present, the Indian non-basmati rice is expensive by 5-10 per cent compared with other traditional competitors such as Thailand, Vietnam, Pakistan and Myanmar, Rao said. However, the entry of Chinese rice into the markets this year has compounded the problem for Indian exporters, he added.
Rao said the Chinese State agency COFCO is out in the market to liquidate old stocks of 3-4 million tonnes and is targeting markets in Africa, including Egypt. India has around 50 per cent share in African rice market, estimated at around 15 million tonnes annually.
India’s non-basmati rice shipments slowed down during October-December quarter last year due to the impact of the higher paddy MSP, which saw an increase of 13 per cent for the kharif 2018 season. The announcement of 5 per cent MEIS helped offset the impact of higher MSP.
Incentive sought
A further increase of 3.7 per cent in MSP for kharif 2019 has added to the exporters’ challenge. The government should look at a scheme such as Bhavantar or direct cash transfer instead of increasing MSP, he said.
India is the largest exporter of rice and accounts for a fourth of the global shipments. In 2018-19, non-basmati rice exports fell to 7.5 million tonnes from 8.8 million tonnes in the previous year. In value terms, the shipments fell to $3 billion during 2018-19 from $3.63 billion in the previous year.
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