NEW DELHI: The Centre has lowered the minimum export price (MEP) for basmati rice further to make it more competitive in the global market.
Exporters can now sell basmati valued at $900 per tonne or more instead of the earlier floor of $1,100 per tonne. This follows intense lobbying by rice exporters and state governments.
As per a notification issued by the directorate general of foreign trade (DGFT), export of basmati rice will now be permitted only if the MEP is $900 per tonne or Rs 41,400 per tonne. The notification imposes the additional condition that foreign commission up to 12.5% is to be allowed for computation of MEP and any discount/commission in excess of 12.5% will not be allowed for calculation of MEP.
The government was under a lot of pressure from basmati exporters and state governments such as Haryana, Uttar Pradesh and Punjab for lowering of MEP. Both had argued that Indian basmati was being outpriced by Pakistani basmati in western markets and needed to be sold cheaper. While states had demanded that the MEP should be brought down to the level of $900-$1,000 per tonne, exporters had demanded that it should be reduced to $750 per tonne which, they claimed, was the price at which Pakistan sells its basmati.
Pakistan is India’s only competitor in the market for basmati, as the aromatic variety is grown only in these two countries for which they hold a Geographical Indication (a global recognition that a particular item originates from a specific place).
The government had placed restrictions on export of basmati rice in April last year as part of its overall attempt to check rising inflation in the country. India had imposed a ban on export of non-basmati rice and restricted exports of the basmati variety by imposing an export tax (Rs 8,000/tonne) and fixed an MEP of $1,200 per tonne.
Following a lowering of basmati prices in the domestic and international market, the government decided in January this year to remove the export tax and lower MEP to $1,100 per tonne.
Source : The Economic Times