Indian basmati rice needs to expand global footprint

Written by Sandip Das | New Delhi | Updated: Dec 1 2009, 04:53am hrs
Though basmati rice (aromatic) exporters may remain unperturbed by the recent decision of the Saudi Arabia government to end rice import subsidy, it raises questions on Indias over dependence on the Gulf market for its aromatic rice exports.

The Gulf countries, including Saudi Arabia and Iran, aaount for more than 60% of the Indias total basmati rice exports, which in 2008-09 was estimated to be around 2 million tonne. Saudi Arabia, the biggest importer of Indias traditional variety of basmati rice, announced a $266.67 per tonne import subsidy in December 2007, when rice prices went up drastically. The Saudi government has decided to end the subsidy from Sunday as global rice prices have cooled down.

As of now, there is no need to worry and our exports would continue as per schedule, VK Arora, president, All India Rice Exporters Association, told FE.

Another rice exporter said that due to superior quality of rice from India, contracts are being signed at prices higher than the $900-a-tonne minimum export price (MEP) decided by the government a few months back.

Average contracts for Saudi Arabia are in the range of $1,100$1,200 a tonne and there are basmati varieties which command more, he said.

Iran recently conducted an independent testing of imported basmati rice from India after media reports in Tehran alleged it contained contaminated objects. Though the Iran government, subsequently, gave clean chit to Indian imports, experts believe that Indian basmati exports remain vulnerable to external scrutiny. India has exported around 7-8 lakh tonne of basmati rice to Iran ever since exports started three years back.

We must seek new regions for our basmati exports instead of depending on only a few countries, a commerce ministry official said.

Pakistan, Indias biggest competitor for the basmati market, had abolished its MEP on basmati and is seeking to expand its footprint. In India, the government also lowered the MEP on basmati rice from $1,100 to $900 a tonne in September 2009 to facilitate more exports. India, which exported 2 million tonne of basmati rice last fiscal, aims to increase volume by half a million in the current fiscal.

The countrys basmati rice exports have been boosted after the government recognised the long grain Pusa 1121 as basmati particularly to countries such as Iran and Saudi Arabia.

Meanwhile, the area under the basmati variety of crops in Punjab and Haryana has increased by around 20% to 40% during the current kharif season with Pusa 1121 variety holding a major share. In Punjab, area under basmati variety has increased to over 7 lakh hectare while in Haryana it is around 5.5 lakh hectare.

According to the Agricultural and Processed Food Products Export Development Authority (Apeda), value of rice exports from the country during 2008-09 was Rs 11,162 crore, marginally down from Rs 11,755 crore in the year before.

After the government banned exports of non-basmati rice last year, there was a fear that rice exports could be affected. However, exports picked up owing to huge demand for the Pusa 1121 variety.