India may lose top slot to Pakistan in Basmati export race

10.02.2017

India's basmati rice exports are likely to lose out to Pakistan as Iran has fixed its import price at $850 per tonne, which is not viable for Indian suppliers due to higher freight costs.

Iran is set to resume issuing permits for the import of rice but Indian traders and officials are concerned. “Indirectly , this will benefit Pakistan because of its proximity to Iran. Transportation costs are higher for us,“ said an official from the Agricultural and Processed Food Products Export Development Authority (Apeda).

Indian exporters have sought the import price by Iran to be at least $900 per tonne for the trade to be economical.

“Pakistan may be nearer to Iran, but it doesn't have rice to export.We are confident that Iranian companies will understand that India had a 20-30% lower crop than previous year and hence selling below $925 a tonne is not viable,“ said Mohinder Pal Jindal, president All India Rice Exporters Association (Airea).

The industry is hopeful that the latest move will not impact them much because Iran has also reduced import duty on rice to 26% from the 40% levied earlier.

As per government data, Iran imports about 1 million tonne of rice every year to supplement its domestic production of about 2 million tonne. Of this, about 0.7 million tonne is imported from India. Of the 4.05 million tonne basmati rice exported by India in 2015-16, 0.69 million tonne was to Iran. According to the Airea, total basmati rice export in AprilDecember 2016 was 2.92 million tonne, compared to 3.06 million tonne in 2015-16 in the same period. Besides transportation, there are cartelisation worries too. The official said that 5-6 Iranian companies have created a cartel and are controlling the prices of rice (both imports and the selling price in the domestic market).

“The system is not very transparent and India has overexposed itself to Iran,“ he said.

As Iran imposed a temporary ban on import of rice last July , Indian exporters have sent only 0.52 million tonne till date. Jindal said over 50,000 tonne of basmati rice was already lying at the Bandar Abbas port since January this year.


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