The Centre is poised to lower the floor price for basmati rice exports and replace the 20 per cent export tax on parboiled rice with a fixed duty, citing government sources Reuters reported on Thursday. This move comes as rice inventories in the country hit a record high. According to the report, India, the world's largest rice exporter, imposed various export restrictions in 2023 and continued them into 2024 to stabilise local prices ahead of the general elections held in April-May.
The minimum export price (MEP) for basmati rice is expected to be reduced to $800-$850 per metric ton, down from $950 per metric ton, to stimulate exports, one of the sources told Reuters.
Lowering the MEP is aimed at helping India maintain its market share against Pakistan, which achieved record rice exports this year due to India's export curbs.
India and Pakistan are the leading exporters of basmati rice. India exports more than 4 million metric tons of basmati rice annually to countries such as Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates, and the United States.
Additionally, the central government is anticipated to abolish the 20 per cent export tax on parboiled rice and introduce a minimum export tax to prevent under-invoicing of shipments, the sources added.
Last month, Reuters reported that the government was considering easing rice export curbs, including resuming exports of white rice.
Amid concerns about reduced output due to the El Niño weather pattern, the government banned overseas shipments of non-basmati white rice varieties in July 2023 and imposed curbs on other grades. "With rice supplies significantly exceeding local demand, it's crucial to reduce stockpiles to prevent spoilage. The most effective solution is to lift export restrictions," said BV Krishna Rao, president of the Rice Exporters Association (REA).
Rice stocks at state warehouses have surged to 48.51 million metric tons as of July 1, the highest ever for the month and nearly 19 per cent more than last year, according to the Food Corporation of India. The government is also expected to review the export ban on non-basmati white rice after assessing the progress of rice planting, the sources stated.
Farmers have planted 11.6 million hectares with rice paddy so far during the current planting season, a 20.7 per cent increase compared to the same period last year.