New Delhi: India’s basmati rice exports are expected to fall sharply as an export tax makes the grain more costly, while its rival Pakistan gains from a steep fall in its currency, a top exporter said on Wednesday.
R.S. Seshadri, director of Tilda Riceland Pvt. Ltd, India’s largest basmati rice exporter, said the price gap between premium varieties from the two countries had risen to about $500 (Rs23,150) a tonne. “With a gap of $500 a tonne, there is no question that a foreign buyer will look at India. This gap has been existing for the last two months,” he said.
Seshadri said new export contracts were usually signed in October, just ahead of the harvest of the new crop.
India’s basmati rice prices are quoting at about $1,400 a tonne for varieties usually shipped to West Asia. The government slapped a tax of about $200 per tonne on overseas sales of its aromatic basmati variety of rice earlier this year.
It also allowed exports of the premium grades only at a floor price of $1,200 per tonne.
“The $200 tax is just the last straw and it is not at all helping. Neither does it go to the farmer nor to the trader,” Seshadri said. “A clarification on this is needed as soon as possible. The new rice crop is going to come in a month or two.”
He added the government would be under pressure to roll back the export tax by October or November if Indian exporters lose market share, but by then farmers would have already sold the crop at a lower price.