Higher taxes in importing countries, along with absence of government support at home, are squeezing India’s basmati exporters, say trade executives. Shipments of the premium quality aromatic rice have already taken a hit.
"Basmati exports till September have dropped by approximately 20 percent to 2.2 million tonnes compared with the previous year," said Mohinder Pal Jindal, president of the All India Rice Exporters Association.
Exporters now want the government to restore an interest subvention scheme discontinued in March 2014 to help them, with some of them demanding the government to enhance it to 5 percent from the earlier 3 percent.
In 2013-14, India exported 10.5 million tonnes of rice, helping keep its top position in the global market for the staple grain. Out of this, more than 4 million tonnes were basmati, with Iran being the biggest market. "Iran has increased import duty from 10 per cent to 45 percent, Pakistan is offering competitive prices in global market," said Jindal. "We are getting very less orders and want government to support the sector."
A sizable chunk of India’s basmati rice output is exported. Exporters usually store basmati rice for one-two years, a process calling ‘ageing’ to improve the aroma. Several of them are sitting on such stocks and in the absence of government support and because of high interest on loans, companies say they are set to make losses.
The average price realisation of Indian basmati in global market has come down to $1,100 a tonne from $1,450 last year. This has led to a drop in basmati prices in the local wholesale markets, too.