The Indian government has put a temporary halt on the export of basmati rice shipments priced below $1200 per tonne, while allowing exports above that threshold, according to an order released on Saturday. This move aims to curb inflation by slowing down the export of one of India’s high-value export commodities. India is the world’s largest exporter of basmati rice, with shipments worth over $4.79 billion in 2022-2023, primarily to the Middle East and the US.
To address persistent high food prices, India had previously banned the export of all grades of non-basmati white rice in July, resulting in a spike in global prices. These new restrictions on basmati rice exports are expected to further impact global prices. The commerce ministry’s order states that this step was taken based on credible information that non-basmati rice was being exported using provisions meant for aromatic basmati rice.
According to the order, basmati rice export contracts with a value below $1200 per metric tonne will be temporarily withheld. These contracts will be evaluated by a committee established by the chairman of the Agriculture and Processed Food Products Export Development Authority (APEDA). Export contracts with a value above $1200 per tonne can proceed as usual.
This move has raised concerns among traders, who view it as effectively setting a minimum export price for basmati rice. They suggest that this could give an advantage to competitors like Pakistan in the basmati rice market. The Indian government has been implementing a range of export restrictions on cereals to address high food inflation, which reached 11% in July, contributing to an overall consumer inflation rate of 7.44%.
The government’s approach to controlling inflation has included curbing exports and releasing stocks from state-held granaries. Recently, an export duty of 20% was imposed on parboiled rice, and additional quantities of wheat and rice were released through auctions. Despite these measures, challenges from excess rain damage to vegetables and vulnerabilities in pulse production persist.
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