Export shipments of Basmati rice have been held up at the western ports, mainly at Kandla and Mundra, over the past two months due to adverse impact of export tax imposed by the government and a higher minimum export price (MEP).
Over 60,000 tonne of export cargoes including containers and break bulk, are awaiting clearance from Indian sellers due to uncertainty in the rice trade on expectations of an abolition of the export duty, said trade sources.
Export shipments of Basmati and the Pusa 1121 variety were supposed to leave for Saudi Arabia and Iran in December. Nine parties from the Middle East and the European Union (EU) have refused to take delivery of the consignments in the pipeline at various destinations. Many others may follow suit, trade sources added.
?On one hand, exports are falling and on the other, buyers are re-negotiating agreed prices to exploit the situation to their advantage and this has increased the exporters? woes,? said Vijay Setia, president, All India Rice Exporters Association.
The imposition of the export tax and a higher MEP has led to Pakistani exporters snatch India?s share at the international markets as their Basmati rice continues to be considerably lower by $300-$400 per tonne vis-?-vis India?s offer. ?Saudi Arabia and the EU have already shown great inclination towards Pakistani Basmati in view of our higher prices,? he said.
?The price of Indian Basmati is around $1,250 per tonne, while Pakistan offers the same variety at $900-$1,000 per tonne. Indian varieties would be available at $1,050 per tonne or even lower, if the government abolishes the export duty,? said a leading broker.
The government imposed an export duty Rs 8,000 per tonne on Basmati and fixed an MEP of $1,200 per tonne from April 2008. ?We have requested the government to remove the export tax and reduce the MEP to $1,000 per tonne,? Setia said. Despite the fact that procurement is expected to exceed the target set by the government this year due to a good Basmati crop, the government has so far not considered the industry?s request for the removal of the tax and a reduction in MEP which may help the trade to improve sales and complete pending payments to 50%-60% of farmers and commission agents.
Exports of Basmati dropped by over 65%, to decline to just 60,000 tonne to Saudi Arabia and Europe togther during the August-October 2008 quarter compared with consignments of one lakh tonne to Saudi Arabia and 70,000 tonne to Europe made during the same period in 2007.