Government Lifts Floor Price on Basmati Rice Exports
In a pivotal move aimed at invigorating the export market for India’s esteemed basmati rice, the Government of India has officially removed the floor price on its export. This significant policy change is expected to enhance the competitiveness of Indian basmati rice globally and address various trade dynamics.
The floor price for basmati rice, initially set at $1,200 per metric ton (MT) in August 2023, was implemented as a temporary measure to manage domestic rice prices and prevent the potential misclassification of non-basmati rice as basmati. This step was taken in the wake of an export prohibition on Non-Basmati White rice, which created concerns about the integrity of basmati rice exports. The policy aimed to protect domestic farmers from volatile market conditions and ensure that exported rice met high-quality standards.
Following representations from industry stakeholders and trade bodies, the government revised the floor price to $950 per MT in October 2023. This adjustment was made in recognition of the need to balance domestic market stability with the realities of international trade dynamics.
The decision to completely remove the floor price comes in response to a more stable domestic supply situation and evolving trade considerations. With domestic rice availability now adequate, the government has opted to eliminate the pricing floor to enhance the appeal of Indian basmati rice in the international market. This move is expected to open new opportunities for exporters and increase India’s share in the global rice trade.
The Agricultural and Processed Food Products Export Development Authority (APEDA), responsible for overseeing the export of agricultural products, will continue to monitor export contracts closely. APEDA’s role will be crucial in ensuring that export practices remain transparent and that prices reflect realistic market conditions, thereby preventing any potential distortions in the basmati rice market.
This policy shift is anticipated to significantly benefit Indian basmati rice exporters by allowing them greater flexibility in pricing. As a result, India’s position as a leading global supplier of this premium rice variety is expected to be further reinforced, providing a substantial boost to the country’s agricultural export sector.
Overall, the removal of the floor price aligns with the government’s broader strategy to enhance agricultural exports and support the economic growth of the rice industry, while simultaneously addressing global trade dynamics and market demands.
