India Cuts Basmati Export Floor Price to Stay Competitive in Global Market
India Cuts Basmati Export Floor Price
India, the world's largest rice exporter, is considering reducing the minimum export price for basmati rice shipments to enhance the appeal of this premium variety in the global market, according to sources familiar with the matter.
The Indian government, which has restricted the overseas sales of all rice grades to control domestic food inflation, plans to lower the minimum export price to $850 per ton from $1,200, as reported by anonymous sources due to the confidential nature of the discussions. A formal decision on this issue is expected to be made soon.
This move comes in response to industry demands, with stakeholders arguing that current price levels make Indian basmati rice more expensive than that from competing countries like Pakistan. Basmati rice constituted approximately 20 percent of India's total rice exports in 2021-22.
A spokesperson representing both the food and commerce ministries declined to comment on the proposal.
This potential decision aims to assist Indian traders in competing in the global market and reduce the worldwide prices of basmati rice, a variety primarily grown in the Indian subcontinent, known for its longer grain size and distinctive aroma. It is anticipated that this measure will not exert upward pressure on local rice prices, as India traditionally exports the majority of its basmati rice.
Earlier, in August, South Asia set the floor price to prevent some traders from smuggling non-basmati white rice, which has been banned for exports, by falsely labeling it as the more expensive basmati variety. The benchmark Asian rice price surged to its highest level in about 15 years last month due to global supply concerns, subsequently receding following an improved outlook for the Thai rice crop.
While this potential adjustment in basmati exports is underway, restrictions on the export of wheat, rice, and sugar could persist for a more extended period, traders suggest. The government may ease some regulations after the harvest of monsoon-sown crops in October and November, but several restrictions might continue until early 2024, when national elections are scheduled to take place.
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