New Delhi: Battling inflation, the government on Friday withdrew incentives on export of basmati rice to improve supplies and check prices of the premium foodgrain in the domestic market.
In an all-out effort to tame price rise touching a three-year high of 7%, the government has already taken several measures, including ban on export of rice, other than the basmati variety.
The Cabinet Committee on Prices, which met early this week, revised the export bar by increasing minimum price to $1200 a tonne for basmati rice.
“Export of basmati rice shall not be entitled for DEPB (Duty Entitlement Pass Book) benefits,” the Directorate General of Foreign Trade said.
Analysts believe that the removal of DEPB benefits would not make much difference to the export shipments since there is a huge demand for the Basmati rice in the global market and the competition is limited to India and Pakistan.
According to market trend, the price of ‘average’ quality basmati rice has gone by 50% in the last six to eight months. “The rise in prices of the high-end quality has nearly doubled,” a trader said. However, the prices are not likely to go up further, he added.
“India’s only competitor is Pakistan in basmati. In fact, since India has better varieties such as Taraori and Bundi, exports are not going to be affected,” Religare Commodities analyst Abhay Lakhman said.
He said the exporters would find ways to make up for the loss of DEPB incentive -- 1.5% of export value.
On the issue of high stamp duty in real estate sector, he said the industry would have to follow the law of the land. It is a complex issue to be resolved by the states and may take time.
Participants in the conference agreed that Sebi would have to issue “clear guidelines on the valuation of assets to ensure credibility of the products” among retail investors.
The Reserve Bank has also warned about potential asset- price bubble considering strong demand for housing and buoyancy in real estate prices in an environment of non-transparency.
On the issue of Real Estate Investment Trusts (REITs), which invest directly in real estate projects after collecting funds from investors through stock exchanges, Nair said no decision has been taken in this regard and it would be handled separately. Sebi had issued draft guidelines in this regard last year.
India exports Basmati rice, mainly to Gulf countries where the aroma of the longish and non-sticky grain is widely appreciated.
Earlier, exporters had slammed the ban on non-basmati exports terming the decision as “hasty”. They said there was no need to put a blanket ban when the minimum export price (MEP) was raised.
“The government should be mainly concerned over the increase in prices of the ‘fair average quality´, commonly consumed in the country, and should not restrict basmati rice,” a leading exporter said.
Before the blanket ban on non-basmati rice export was imposed, the government had taken other steps to discourage exports like revising the MEP to $1,000 a tonne from $650 a tonne.
India has exported 3.18 million tons of non-basmati rice, valued at Rs3,759.84 crore during April-October period. In the previous year, exports stood at 3.70 million tons valued at Rs4,243.08 crore.
Basmati rice exports till October 2007 were 5,67,000 tons valued at Rs1,687.77 crore. In the previous year, these exports were 1.45 million tons valued at Rs2,792.81 crore.