India Likely To Bring Down Floor Price For Basmati Rice Exports, Say Sources

India may slash floor price it has set for basmati rice exports, government and industry sources said on Tuesday, after farmers and exporters complained it was damaging trade, according to a Reuters report.

The government is likely to reduce the floor price, or minimum export price (MEP) for basmati rice, to $950 per metric ton from $1,200 a metric ton, said the sources, who requested anonymity as the decision has not been made public.

India imposed a $1,200 per ton MEP on basmati rice shipments in August to keep a lid on local prices ahead of key state elections, Reuters reported.

The MEP was expected to be cut with the arrival of the new season harvests, but the government said on Oct. 14 said it would maintain it until further notice, angering farmers and exporters who said the new crop had led to a drop in domestic prices.

Authorities later said they were actively reviewing the MEP.

India and Pakistan are the only growers of basmati rice. New Delhi exports more than 4 million metric tons of basmati - the premium long-grain variety famed for its aroma - to countries such as Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates and the United States, as per the Reuters report.

"The decision to lower the MEP would help both farmers and exporters who suffered on account of the $1,200 MEP," said Prem Garg, president of the Indian Rice Exporters Federation.

The MEP hit the trade so severely that exporters stopped buying the rice from farmers, he said.