The row over India imposing export duty on the premium basmati rice is not yet over. Quite recently it was the Riyadh Chamber of Commerce and Industry, which complained about the heavy duty being passed on the Saudi Arabian importers as the India exporters were unwilling to bear it at their end.
Now, the Federation of Indian Chamber of Commerce and Industry (Ficci) has written to the prime minister, Manmohan Singh to scrap the controversial export duty.
India has imposed export duty of Rs 8,000 a tonne on basmati rice, which translates into $188.23 a tonne at the current exchange value of $1 at Rs 42.50. A minimum export price (MEP) for basmati rice has also been fixed at $1,200 a tonne, which the government assured to bring it down to $1,000 a tonne.
Last Friday a delegation of All India Rice Exporters’ Association (AIREA) met the Union agriculture minister, Sharad Pawar and had suggested that the export duty should be scrapped as number of exports contracts have been booked earlier which did not factor in this new duty.
If the government wants to impose an export duty, it can impose it at the beginning of the next year. AIREA also suggested that instead of bringing down the MEP for basmati from $1,200 a tonne to $1,000 a tonne, it should be raised to at least $1,400 a tonne, thus bringing it close to the global prices.
The government’s measures of raising the MEP and imposing export duty on Basmati rice were a part of the efforts aimed discouraging exports and augmenting the domestic supply to fight the inflationary trend in prices.
The government believes that with the gradual depreciation of Indian rupee vis-?-vis US dollar the impact of the export duty would be minimised to an extent.
However, the FICCI general secretary, Amit Mitra in a letter to the prime minister, Manmohan Singh has expressed concern over the possibility of Indian exporters losing their market to their counterparts in Pakistan, if the export duty was not scrapped. In 2006-07 India exported 1.06 million tonne Basmati rice. Suadi Arabia imports about 625,000 Basmati rice, out of which 575,000 are from India. Mitra said that Pakistan took a wise decision of not imposing export duty and hiking the MEP for low grade Basmati rice to $ 1300 a tonne and that of high grade Basmati rice to $ 1500 a tonne.
