NEW DELHI: The minimum export price (MEP) of Basmati rice is likely to be reduced again after elections as export of the premium rice variety from India has dropped significantly since January this year due to lower prices offered by Pakistan in the international markets, a government official, who wished not to be identified, said. Indian exporters are not free to export Basmati rice below the MEP fixed by the government.
“A further reduction in the MEP of Basmati is definitely on the cards,” the official said. A formal decision on the issue will be taken by the empowered group of ministers on prices after the elections are over next month. The committee of secretaries (CoS) has informally acknowledged the need to bring down the MEP below $1,100 a tonne, the official said. The current MEP of Basmati rice is $1,100 a tonne, while Pakistan is selling its Basmati at $765 a tonne.
According to a commerce department official, there was no export of Basmati rice from the country in January. In January, the government had reduced the MEP from $1,200 a tonne to $1,100 a tonne due to softening of Basmati prices in the domestic and international markets. Last year, when commodity prices were hitting the roof, India had imposed a ban on export of non-Basmati rice and restricted exports of the Basmati variety by imposing an export tax of Rs 8,000 a tonne, besides fixing a minimum export price of $1,200 a tonne.
The export tax on Basmati rice was also removed in January 2009. According to industry estimates, India’s Basmati exports in fiscal 2008-09 will be about 1.2 million metric tonne, which is much lower than exports of 1.8 million metric tonne in the previous fiscal.
Source : The Economic Times