Basmati export benefits from ban on DA, exporters seek similar move for non-basmati

29.05.2017

Basmati, premium rice, has brought back flavour in the export for the domestic companies who are hailing timely payments from overseas buyers after the Indian government banned documents against acceptance (DA) for the commodity in the current marketing season. The exporters are mulling to seek similar DA restriction for export of non-basmati from India in the ensuing marketing season.

The practise of DA had tilted the basmati trade in favour of overseas buyers due to rise in defaults, delayed payments and price manipulations that adversely affected domestic companies. The DA allowed export of consignment without settlement of payments. Even though DA has been banned in the last year for export of basmati but the practise is still prevalent in case of export of non basmati from India.

"The curb on DA in export of basmati has decreased defaults in the trade and also given control over prices to the domestic exporters," executive director, All India Rice Exporters Association (AIREA) Rajen Sudershan told ET. Sudershan said that the rice exporters lobby is contemplating to seek ban on DA in case of non-basmati from the Indian government. "The move will boost export and also benefit different stakeholders in the rice trade," he said.

The rice exporters maintain that the ban on DA had brought benefits to domestic companies as well as farmers who received timely and higher remuneration this time compared to the previous marketing season.

"The policy amendment on DA by government has given confidence to exporters who were exploited by buyers once consignments have been delivered," Vijay Sethia past president of AIREA said. Sethia said that the practise of DA allowed buyers to manipulate all companies who were forced to compromise on margins.

This year the ban on DA has promoted transaction through Cash against documents and Letter of Credit. "It has lead to better rice realization to exporters and higher remunerations to farmers," Sethia said.

The export of basmati this season stood around 3.99 million tonnes till March 2017 compared to 4.4-million tonnes in 2015-16. The Indian basmati export has been affected due to less basmati trade to Iran after the gulf nation introduced price regulation of $850 per tonne on basmati import.


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