Basmati exports to take a hit this fiscal due to low buying from Iran and Saudi Arabia

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Published: January 30, 2020 1:07:19 AM

On the other hand, DGCIS sources said that Iran, the largest rice importer, has been seemingly balancing its import of rice with its export of crude oil to India.

This would put India’s total value of Basmati exports this fiscal way behind the last fiscal’s figure.

Pre-emptive buying by Iran and Saudi Arabia has muted the overall exports growth of Indian Basmati rice in the current fiscal. During the first six months of the fiscal, rice worth Rs 15,564 crore has been exported, which is less than half of the value of rice exported during the last fiscal. Basmati rice exports were worth Rs 32,806 crore during 2018-19 but it seems to be difficult to reach this figure this fiscal with Iranian imports halted.

Iran has been driving the exports of Indian Basmati rice but during April-October this fiscal, it made purchases worth Rs 4,005 crore only, which according to traders is unlikely to touch the last fiscal’s figure of Rs 10, 790 crore. India is likely to end the fiscal exporting Rs 8,000 crore worth of Basmati rice to Iran at best. This would put India’s total value of Basmati exports this fiscal way behind the last fiscal’s figure.

According to figures available from Directorate General of Commercial Intelligence (DGCIS), imports have sharply dipped from Saudi Arabia, Iraq, Kuwait, United Arab Emirates and Yemen due to tighter pesticide residue norms.
Saudi Arabia’s newly introduced quality certification norms has become a great obstacle for Indian exporters.

Though, for the April-October period this fiscal, exports to Saudi Arabia were worth Rs 3,215 crore, the tighter pesticide and residue norms were effective from September, which made shipments from that time onwards difficult.

Basmati exports to Saudi Arabia were worth Rs 6,549 crore last fiscal and it is unlikely to cross Rs 6,000 crore this fiscal, sources in the DGCIS said.

The Saudi Food & Drug Authority (SFDA) has made it mandatory that each rice consignment has to have a certificate of conformity (COC) from authorised agencies. SFDA has authorised Intertek and TUV Australia to issue COC to Indian rice exporters. Saudi Arabia has also demanded disclosure of the source or origin of rice, which is an unfeasible condition for the Indian exporters.

An official in Agricultural and Processed Foods Product Export Development Authority (APEDA) said that it has introduced food safety management system (FSMS) based on international pesticide and residue norms, to which Saudi Arabia and other European nations have responded. Though shipment to Saudi Arabia for the month of September was halted, it was renewed from October end, with lower consignments though.

On the other hand, DGCIS sources said that Iran, the largest rice importer, has been seemingly balancing its import of rice with its export of crude oil to India. India discontinued importing crude oil from Iran since June 2019 and this has made trade more uncertain with the country. Iran and Saudi Arabia have been leading destinations of Basmati exports but with imports sharply declining from these two countries, India’s over all Basmati exports will be hit hard.

India’s foreign policy, as well as its domestic political scenario has been influencing trade principles in the OIC ( Organisation of Islamic Countries) member states and this can partly explain the pre-emptive buying by almost all OIC nations, a commerce ministry official said on the condition of anonymity.

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