India to Revamp Basmati Rice Export Policies Amid Record Inventory Surge

India plans to lower the floor price for basmati rice exports and replace the current 20% export tax on parboiled rice with a fixed duty to counter record-high rice inventories. These changes aim to boost exports and retain market share against Pakistan, while assessing the potential revival of non-basmati white rice shipments.

India is poised to reduce the minimum export price for basmati rice and substitute the 20% export tax on parboiled rice with a fixed duty, government sources revealed. This shift comes as the country's rice inventories hit an all-time high.

The world's leading rice exporter implemented various export restrictions in 2023 and continued them into 2024 to manage local prices ahead of the general elections. Sources, opting for anonymity, indicated that the minimum export price (MEP) for basmati rice could decline to $800-$850 per metric ton from $950 per ton to stimulate exports.

Lowering the MEP is crucial for India to maintain its export market share against Pakistan, which saw a record high in rice exports this year. India exports over 4 million metric tons of basmati rice annually to countries like Iran, Iraq, and the United States.

Additionally, India is anticipated to replace the 20% export tax on parboiled rice with a minimum export tax to curb under-invoicing of shipments. The government is also considering easing export restrictions on white rice, Reuters reported last month.

Due to anticipated lower output from the El Nino weather pattern, India had banned non-basmati white rice exports in July 2023. With rice supplies surpassing local demand, experts argue that removing export restrictions is integral to preventing stockpile spoilage.

The Food Corporation of India reported a spike in rice stockpiles to 48.51 million metric tons as of July 1, marking the highest ever for the month and a 19% increase from last year. The government will review the export ban on non-basmati white rice post-assessment of current rice planting progress.

Farmers have planted 11.6 million hectares of rice paddy so far, a 20.7% increase from the same period last year.

(With inputs from agencies.)