India’s Basmati rice exports in the current fiscal are expected to decline due to sluggish demand from Iran, which used to account for a quarter of the country’s aromatic and long grain rice shipments till recently.
According to commerce ministry data, in the first half of the current fiscal, Basmati rice exports to Iran have declined to 4.2 lakh tonne from 8.5 lakh tonne achieved during same period last year.
Overall volume of Basmati rice exports has declined to 1.4 million tonne in April-September 2014 compared to 1.9 million tonne reported in the first six months of the last fiscal. However, value-wise the exports during the same period have declined marginally to R13,848 crore from R14,111 crore.
Industry sources told FE that due to sufficient domestic availability of grain, exports prospects to Iran are not bright in the last half of the current fiscal. In the last couple of months, the shipment to Iran has slowed down significantly, resulting in reduction in exports of Basmati rice from the country.
“The shipment to Iran has been on a slower side because of sufficient domestic stocks available there and next few months would be crucial for the rice industry,” Rajen Sundaresan, director, All India Rice Exporters Association (AIREA), said.
Iran’s annual consumption of rice is estimated around 3.5 million tonne. Around 2 million tonne is produced in the country while the rest being imported from India.
Out of total exports of 3.7 million tonne of Basmati rice from the country in 2013-14, 1.4 million tonne of rice was shipped to Iran. In the last two fiscals, exports to Iran had been to the tune of 1.8 million tonne and 1.4 million tonne respectively.
The rice shipment to Iran got a boost when India launched a rupee settlement mechanism from April 2012 with Iran to avoid sanctions from the US and the European Union. As part of this initiative, state-owned UCO Bank has tied up with four Iranian lenders — Parsian, Pasargad, Saman and EN Banks — for settlements of dues.
A commerce ministry official said that the Basmati rice industry must explore new market for exports rather than depending on few countries.
Meanwhile, the rice exporters have urged the government to restore an interest subvention scheme discontinued in March 2014 to help them, with some of them demanding the government to enhance it to 5% from the earlier 3%.
In 2013-14, India exported 3.7 million tonne of Basmati rice worth of close to R30,000 crore.
Apart from Iran, other key destinations for the Indian Basmati rice are Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, European Union and the United States.