In a move aimed at enhancing India’s position in the global rice market, the government has lifted the minimum export price (MEP) for basmati rice. Previously set at $950 per tonne, this price floor has been scrapped to encourage more outbound shipments and improve farmers’ incomes, particularly in key rice-growing states like Haryana and Punjab.
The removal of the MEP is part of a broader strategy that includes reducing the 40% export duty imposed on rice exports since May 4, 2023. The timing of these decisions is significant, as they come ahead of the assembly elections in Haryana, a major basmati rice-producing state, along with Punjab.
Background on the Export Price Threshold
India had set the minimum export price for basmati rice at $950 per tonne as part of its efforts to regulate exports and ensure that non-basmati varieties, which are cheaper, were not being exported under the guise of premium basmati rice. This policy aimed to prevent the illegal shipment of non-basmati rice, which is in high demand internationally due to its lower price, while maintaining a balance in the domestic market.
Earlier, in August 2023, the government raised concerns about possible mislabeling and decided that basmati rice could not be exported below $1,200 per tonne. However, in October 2023, this price threshold was lowered back to $950 per tonne to ease pressure on exporters and support the rice trade.
Boost for Farmers and Exporters
Commerce and Industry Minister Piyush Goyal highlighted the potential benefits of removing the minimum export price. According to him, this step is expected to significantly boost basmati rice exports and increase income for farmers, especially in regions like Haryana and Punjab, where basmati rice is a crucial crop. “The decision to remove the $950 per tonne MEP will open up new export opportunities and strengthen India’s position as a leading exporter of basmati rice,” he said.
The Agricultural and Processed Food Products Export Development Authority (APEDA), responsible for regulating rice exports, has been instructed to take immediate steps to implement this decision. Additionally, APEDA will closely monitor export contracts to ensure that basmati rice is sold at realistic prices in global markets.
Economic Impact
India is the largest exporter of basmati rice, and the crop plays a vital role in the country’s agricultural exports. In the fiscal year 2023-24, basmati rice exports reached $5.9 billion. This was a substantial increase compared to the previous year (2022-23), when exports were valued at $4.8 billion, with a total volume of 45.6 lakh tonnes.
By removing price restrictions, the government aims to further increase export volumes, which will have a direct impact on the income of rice farmers. Exporters will now have more flexibility to compete in international markets, particularly in regions where demand for high-quality basmati rice remains strong.
Future Outlook
The decision to eliminate the export price floor is expected to have a positive impact on India’s rice trade. With APEDA continuing to register export contracts and monitor the market, the government is keen on maintaining the quality of basmati rice exports while ensuring that prices remain competitive on the global stage.
Farmers and exporters alike are hopeful that these measures will not only boost their incomes but also help India maintain its dominant position in the global rice trade. The upcoming assembly elections in Haryana, one of the biggest basmati-producing regions, also add a political dimension to these economic decisions, signaling the government’s focus on agriculture as a key issue.
The basmati crop, grown during the kharif season, will now likely see increased demand as exporters take advantage of the new policy environment, further strengthening India’s rice export industry.
