Export tax on basmati scrapped

Written by Commodities Bureau | New Delhi | Updated: Jan 21 2009, 06:02am hrs
Faced with tough competition from Pakistan and cushioned by falling prices in the domestic market, the government on Tuesday scrapped the Rs 8,000-per-tonne export tax on basmati rice and also lowered the minimum export price by $100 per tonne to $1,100 per tonne.

However, a decision on easing the ban on other agriculture items like wheat and non-basmati rice and also a proposal to re-impose the import duty on crude palm oil has been deferred for the time being.

The import and export regime for other commodities remains unchanged, trade and commerce minister Kamal Nath told reporters after a meeting of the empowered group of ministers. The eGoM also decided to raise the quantum of subsidy on sale of edible oils through public distribution system to Rs 25 per kg from the current Rs 15 per kg.

Meanwhile, while welcoming the governments decision to scarp the Rs 8,000 per tonne export tax rice exporters have expressed apprehension over lower than expected cut in MEP. Even after lowering the MEP Indian rice would command a premium of $300 per tonne more Pakistan, which many European buyers might not be willing to pay, Vijay Sethia, president All India Rice Exporters Association told FE. In April, government had for the first time imposed a MEP on basmati rice of $1,200 per tonne and an export tax of Rs 8,000 per tonne to curb exports and increase local supplies. However, with rice prices falling below $600 per tonne since October, Indian traders were fast losing their premium position in the basmati rice export market to Pakistan, which sold their produce at a lower rate. India annually exports around 5 million tonnes of basmati and non-basmati rice of which the bulk is non-basmati. Gulf countries and Europe are some of the major export destinations of Indian rice.

Indias rice production in 2008-09 (June-July) is expected to be over 96 million tonnes, more than last years output. Meanwhile, earlier on Tuesday, agriculture minister Sharad Pawar hinted that the government is also open to a review of the blanket ban on export of wheat and re-imposing the import duty on crude palm oil.

There is request by government agencies like MMTC and some private traders to allow wheat exports and we will take it up, Pawar told reporters on the sidelines of a conference. India banned exports of wheat and wheat products in 2007 to increase local availability and control rising prices, but since then two consecutive years of bumper harvest and a record procurement of over 23 million tonnes in 2007-08 against a normal requirement of around 15 million has forced the government to rethink its policies.

Meanwhile, Pawar also said that the government could consider re-imposition of import duty on crude palm oil check falling prices in local markets and support growers. The import duty was abolished in April to allow cheaper imports as the country imports more than half of its annual edible oil consumption of around 12 million tonnes. Few months back, the government had re-imposed a import duty of 20% on soyoil to support domestic prices. Since August 2008 prices of crude soyoil has dropped in the local markets has dropped by over 19% and is not being quoted at around Rs 466 per 10 kg, while price of crude palm oil, the largest imported edible oil in the country, has crashed by almost 50% and is now quoted at around Rs 254.40 per 10 kg.