What Exporters Need to Know?
A committee of ministers, led by the Home Minister, is anticipated to make a decision this week regarding the establishment of a minimum export price (MEP) of $0,50 per kg for non-basmati rice exports. The proposal to reduce the current MEP of $0,95 per kg for Basmati rice is expected to be deferred, according to sources.
Meeting with Exporters and Its Impact
Last week, the Commerce Ministry conducted a meeting with exporters to gather their concerns and insights. Based on this meeting, several proposals have been prepared for the ministerial panel’s consideration. Although the specific changes have not been disclosed, industry sources suggest that a fixed export duty will likely be implemented. This duty will apply to both parboiled rice, which is currently exported duty-free and white (raw) rice shipped through the National Cooperative Exports Limited (NCEL). The proposed MEP for non-basmati rice aims to stabilize export prices and protect domestic supplies. The introduction of a higher MEP could impact export volumes and competitiveness in the international market.
Export Performance
India’s basmati rice exports have shown significant growth. In the first two months of the 2024-25 fiscal year, Basmati exports rose by 17% to 0.97 million tonnes from 0.83 million tonnes in the same period last year. However, non-basmati rice exports experienced a notable decline, dropping 32% to 1.94 million tonnes from 2.85 million tonnes in the previous year. This contrasting trend highlights the differing market movements and challenges faced by exporters of Basmati and non-basmati rice.
Strategic Considerations for Exporters
Exporters need to consider several factors in light of these proposed changes. The higher MEP for non-basmati rice may necessitate adjustments in pricing strategies and negotiations with international buyers. Additionally, exporters should closely monitor the potential impacts on demand and chains. Also to any further policy adjustments that may arise.
The proposed establishment of MEP for non-basmati rice exports and the maintenance of the current MEP for basmati rice reflects the government’s efforts to balance domestic supply and international trade interests. By understanding the implications of these policy changes, exporters can better position themselves to meet global demand while ensuring sustainable growth in the rice export sector.