Export of basmati rice is expected to grow by 10 percent to Rs 25,500 crore in 2017-18, mainly on account of China opening its market to India, rating agency ICRA has said.
Opening up of China as an export destination is a positive for the Indian basmati rice industry, ICRA said in a report here.
This will provide a fillip to exporters, who are just recovering from the muted global demand and a correction in prices in the recent past, it said.
"While in FY17, basmati rice export value is expected to remain in line with the FY16 levels, it is expected to grow by 10 per cent to Rs 25,500 crore in FY18.
"China has agreed to import basmati rice from 14 companies in India. In the ongoing harvesting season the volume of basmati paddy is expected to be lower than last year. With the addition of a new market, this could push up the realisations next year. Further, depending on the demand over the coming months, farmers may increase basmati sowing in the FY18 season," ICRA Assistant Vice-President Deepak Jotwani said.
India and China together contribute around 40 per cent of the global rice production, which is estimated at around 740 million tonne of paddy, ICRA said, adding of this the communist nation's share was at around 27 per cent.
However, both the countries are also the largest consumers of rice, thereby restricting their participation in the international trade, it pointed out.
While India is a net exporter of rice, China is a net importer, ICRA said.
Chinese rice is typically short in length and non- aromatic. However, with the increasing income levels and flourishing global trade, the population in China has also developed a preference for other varieties of rice, ICRA said.
This has opened up import from other major rice-producing countries like Thailand, Vietnam, Pakistan and India, it said.
Moreover, it said, China has emerged as the largest importer of rice in recent years.
In India, non-basmati rice accounts for a majority (90-92percent volume share) of the total rice production. However, around 90 per cent of the same is consumed domestically.
Basmati rice, being a premium variety, commands a higher price and the majority (around 75percent) of its production is exported, the rating firm said.
In volume terms, non-basmati rice export from the country stood at 6.4 million tonne in FY16, while shipments were 4 million tonne in the same period, it added.
Source: moneycontrol.com/