The government is currently considering reducing the minimum export duty (MEP) of $950 per tonne on basmati rice, which was introduced last year, as world market prices for some varieties of the aromatic rice have already fallen below the minimum limit. Prices have fallen due to expectations of a good harvest this kharif season and high surplus stocks.

Sources told FE that there have been several rounds of discussions with exporters on this issue recently and a decision to reduce the MIP is expected soon.

The mandi price of early harvest 1509 basmati rice has fallen to Rs 2,500/quintal from Rs 3,000/quintal a year ago. The arrival, which is expected to begin by the end of next month, is expected to push prices of premium Pusa 1121 rice below last year’s level of Rs 4,000/quintal.

Basmati rice production is expected to increase by 10% this year from 7 million tonnes (MT) over last year due to increased area under aromatic rice cultivation. Punjab reported an increase in area under basmati rice cultivation by over 12% from 0.59 million hectares (MT) last year to 0.67 million hectares (MH) this year.

In addition, exporters stated that a stock of about 0.5 tonnes will be carried over in the next season (2024-25) starting October 1.

“In the two months last year, when the government increased the MEP of basmati rice to $1,200 per tonne in August and reduced it to $950 per tonne in October, we lost more than 0.5 tonne of market share to Pakistan in those two months,” Ranjit Singh Jossan, vice president of Punjab Basmati Rice Millers and Exporters Association, told FE. Jossan has stated that reducing the MEP to $700 per tonne would make shipment of aromatic rice from India more competitive with Pakistan.

Pakistan currently imposes a minimum price of US$750 per tonne on basmati rice.

In October last year, the government reduced the MIP for basmati rice shipments from $1,200 to $950 per tonne. This price was fixed on August 25 to curb the “illegal shipment of non-basmati white rice”, the shipment of which was banned in July last year.

However, exporters said that a higher MIP would affect domestic prices and lead to a fall in prices. Of the 7 tonnes of basmati rice produced last year, only 2 tonnes was consumed domestically.

“In the last fiscal year, importing countries have built up huge stocks of basmati rice and the stocks are even higher due to record production in the last kharif season,” said Vijay Setia, managing director of Chaman lal setia exports, a leading exporter of aromatic rice.

In FY 2024, India exported a record 5.24 tonnes of aromatic rice worth $5.83 billion. During April-May 2024-25, the country exported 0.96 tonnes of basmati rice, which is 15% higher than the previous year. In terms of value, the shipment of basmati rice so far was 1.03 billion year-on-year, which is 13% higher than the previous year.

Basmati rice with the geographical indication is grown in over 70 districts in Punjab, Haryana, Western Uttar Pradesh, Jammu and Kashmir and Uttarakhand.

Aromatic long grain rice is particularly in demand on the world market. India has a share of about 75 to 80 percent of the global aromatic rice market, while Pakistan has a share of about 20 percent in the export of basmati rice.