Government Implements Stricter Measures on Basmati Rice Exports, Setting Minimum Price

In a move aimed at fortifying its control over rice exports, the Union government has taken decisive action by imposing stringent restrictions on the export of Basmati rice. This move comes on the heels of a recent ban on non-Basmati white rice exports, which were deemed as Basmati rice in a controversial classification. 

The government's latest action, effective from August 28, stipulates that Basmati rice valued below $1,200 per metric tonne (MT) will no longer be eligible for export.

Clamping Down on Rice Exports

The government had previously imposed a ban on the export of non-Basmati white rice on July 20, 2023, citing concerns over the soaring domestic prices of rice. This decision had raised eyebrows within the agricultural and trade sectors, sparking debates about the potential consequences for both the local and international markets.

New Regulations: Stricter Export Criteria

To further tighten its grip on rice exports, the Union Commerce Ministry has issued directives to the Agricultural & Processed Food Products Export Development Authority (APEDA), the regulatory body overseeing the export of Basmati rice. 

The ministry has instructed APEDA to only register contracts for Basmati exports that hold a value of $1,200 per metric tonne or more. Contracts falling below this threshold will be temporarily suspended and subjected to evaluation by a committee established by the Chairman of APEDA.

The Commerce Ministry highlighted the need for such measures by pointing out the significant disparity in contract prices for Basmati rice exports. Notably, the lowest recorded contract price was a mere $359 per MT, a sharp contrast to the average export price of $1,214 per MT during the month of August.

Awaiting Evaluation: Committee's Role

The newly formed committee, under the guidance of the APEDA Chairman, has been tasked with comprehensively assessing the variance in contract prices and the potential misuse of this pricing gap to export non-Basmati white rice under the guise of Basmati rice. 

The committee is expected to submit its report within one month, which will then guide future decisions regarding exports of Basmati rice below the established price threshold.

Consultations and Collaboration

Recognizing the significance of stakeholder involvement, the Ministry has advised APEDA to engage in consultations with traders. This collaborative approach aims to raise awareness among traders regarding the regulatory changes and encourage their cooperation in avoiding any attempts to exploit the lower price window for exporting non-Basmati white rice.

Implications and International Impact

This recent wave of measures to curb rice exports is not the first of its kind. The government had earlier prohibited the export of broken rice in September 2022 and introduced a 20% export duty on par-boiled non-Basmati rice in August 2023. However, there have been concerns raised about the repercussions of these stringent regulations on the availability of foodgrains, particularly in several African countries that heavily rely on rice imports.

As the new regulations take effect, the industry and trade experts will closely monitor their impact on the domestic and international rice markets. The efficacy of these measures in stabilizing domestic prices and preventing the misclassification of rice types remains to be seen. The government's commitment to strengthening its control over rice exports underscores its determination to ensure food security and economic stability on a broader scale.