India Abolishes Minimum Export Price on Basmati Rice to Aid Farmers

The government announced on Friday that the minimum export price (MEP) of USD 950 per tonne for basmati rice has been lifted. Commerce and Industry Minister Piyush Goyal stated that this decision aims to enhance exports and boost farmers' incomes. The Department of Commerce communicated that the current MEP of USD 950 per metric tonne for issuing Registration-cum-Allocation Certificates (RCAC) for basmati rice exports has been removed.

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APEDA's Role in Monitoring Exports

The Agricultural and Processed Food Products Export Development Authority (APEDA) has been instructed to act swiftly to implement this decision. However, APEDA will continue to closely monitor export contracts to ensure they reflect realistic prices for basmati rice. This measure is intended to prevent any potential misuse or undervaluation in export contracts.

In October last year, the government had reduced the floor price for basmati rice exports from USD 1,200 per tonne to USD 950 per tonne. This reduction was aimed at addressing concerns that higher prices were negatively impacting export volumes. The decision was part of broader efforts to support the agricultural sector and maintain competitive pricing in international markets.

Previous Export Restrictions

On August 27, 2023, the government decided not to permit basmati rice exports below USD 1,200 per tonne. This restriction was implemented to prevent the illegal shipment of white non-basmati rice disguised as premium basmati rice. Such measures were necessary to maintain the integrity of India's rice exports and ensure compliance with trade regulations.

India's total basmati rice exports were valued at USD 4.8 billion in the financial year 2022-23, with a volume of 45.6 lakh tonnes. In the subsequent year, 2023-24, the value of basmati rice exports increased to USD 5.9 billion. These figures highlight the significant contribution of basmati rice exports to India's economy and underscore the importance of maintaining favourable export conditions.

Foreign Trade Policy and Basmati Rice

According to the Foreign Trade Policy, APEDA is responsible for registering all contracts related to basmati rice exports. Following registration, APEDA issues a Registration-cum-Allocation Certificate (RCAC) for each export contract. This process ensures that all basmati rice exports are properly documented and regulated.

The basmati crop is cultivated during the kharif season, which typically spans from June to October. This seasonal cultivation plays a crucial role in determining the availability and pricing of basmati rice in both domestic and international markets.

The removal of the MEP is expected to provide a significant boost to India's basmati rice exports. By making Indian basmati more competitively priced on the global market, it is anticipated that demand will increase, benefiting both exporters and farmers alike.

This policy change reflects the government's commitment to supporting agricultural exports and enhancing farmers' livelihoods. By removing barriers to trade, India aims to strengthen its position as a leading exporter of high-quality basmati rice.

The new measures are expected to have a positive impact on India's agricultural sector, promoting growth and sustainability in the long term.