Government Likely to Reduce Minimum Export Price (MEP) for Basmati Rice

In a significant development for the basmati rice industry, the government is poised to reduce the Minimum Export Price (MEP) for this aromatic grain. Initially set at $1200 per tonne in August, consultations with various stakeholders, including exporters, farmers, and state government officials in key basmati-growing states like Punjab, Haryana, and Uttar Pradesh, have led to the proposal to lower it to $850 per tonne.

Key Points:

  1. Government’s Response:  Following extensive discussions, a formal announcement regarding the reduction of the MEP is expected in the coming days. This decision comes after Commerce and Industry Minister Piyush Goyal initially proposed a reduction to $900 per tonne but ultimately agreed to lower the duty further due to exporters’ insistence.
  1. Export Volume: Approximately 75% of India’s annual basmati rice exports, totaling 4.5 million tonnes, fall within the price range of $700 to $1000 per tonne.
  1. Background: The temporary MEP of $1200 per tonne was imposed in August until October 15 to curb the “illegal shipment of white non-basmati rice” disguised as premium basmati rice.
  1. Misclassification Concerns: The Commerce Ministry received credible reports of misclassification and illegal exports of non-basmati white rice, which had been banned since July 20, 2023.
  1. Committee Findings: A committee, formed by the Agricultural and Processed Food Products Exports Development Authority in collaboration with the Agriculture Ministry, investigated significant price disparities in basmati rice exports in August. The lowest recorded price was $359 per tonne, compared to the average export price of $1214 per tonne. The committee recommended a substantial reduction in MEP to facilitate exports.
  1. Export Figures: From April to July of the current fiscal year, India exported 1.6 million tonnes of basmati rice valued at $1.7 billion, marking a 13.1% increase in value compared to the previous year. The average shipment value for aromatic rice during this period was $1107 per tonne. In the previous fiscal year (2022-23), the country exported 4.56 million tonnes of basmati rice, valued at $4.78 billion, with an average price of $1050 per tonne.
  1. Historical Export Prices: Over the last five years, the average export price of basmati rice, according to the All India Rice Exporters Association, has been $975 per tonne.
  1. Geographical Indication (GI) Tag: Basmati rice, known for its aromatic and long-grain characteristics, is cultivated in approximately 70 districts across Punjab, Haryana, western Uttar Pradesh, Jammu & Kashmir, and Uttarakhand. This rice variety enjoys a premium position in the global market, with India holding a dominant share of around 75%-80% in the global aromatic rice market.

This detailed overview provides insights into the evolving situation regarding basmati rice exports, showcasing the government’s efforts to balance the interests of stakeholders while maintaining the integrity of the industry.

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