``The recent decision to raise the minimum support price of paddy by Rs 500 per tonne, works out to about $25 per tonne excess on the final prices of the average price of the product in the international market,'' sources in the industry said.

With this, foreign exchange estimated at $1.5 billion may also be in jeopardy of being wiped off from rice exports in the current fiscal, industry sources say.

The hardening of the price of the Indian rice is poised to place domestic exporters adversely against the competitors from the South Asian region with a severe price undercutting by the major competitors of India -- Vietnam and Thailand, sources said. Both Vietnam and Thailand are expected to undercut prices in a big way to take on theglobal market in the current season. It may be recalled that last year, Indian non-basmati rice was placed in the range of $275 per tonne.

During this time, both Vietnam and Thailand had priced their non-basmati products at $230 to $245 per tonne level. This time though the two would'nt need to resort to since prices of Indian non-basmati was itself on upward spiral, industry sources said.

With this, exporters have demanded that it is high time now for the government to subsidise exports of non-basmati rice and lift all taxes on earnings of exporters in order to boost the country's share in the world market, according to industry sources.

In fact the industry fears the price undercutting to be so severe that, in the international market the price differentials between the Thailand variety of rice and the Indian one has been reduced to almost zero, sources said.

Normally a price differential of $50 to $75 per tonne was being maintained between the Thailand and Indian rice variety. But this time roundit seems to be a remote possibility, they say.

Despite this, since many of the markets called for purchases of rice as well as drugs on credit to be balanced later, the reservations of financial institutions to provide credit for imports of the importing countries has also played havoc with Indian rice exports.

Indian exporter's have had to forego exports of as much as five lakh tonnes of rice last year to Indonesia with no bank ready to sign the letter of credit, sources said.

Industry sources also point out that the recent failures of Indian exporters to bag orders for supply of rice to various western markets has been due to the poor quality of the product vis-a-vis those available from other sources in South Asia.

The industry is looking forward for an enhanced support by the government for the development of high quality of non-basmati in order to take on competition in the world market.

Even though the industry itself contributes to the research and development fund for high variety rice yetthe government can only spearhead the development, sources said.

This has not only led to decline in customers in the international market but had also led to the loss of image of Indian rice exporters.