Rice Exporters Association
Exports of non-basmati rice from India have come to a standstill, with the government yet to renew a 5% benefit to exporters under the Merchandise Exports from India Scheme, traders said.
Pending renewal of the scheme, which lapsed on March 25, no fresh contracts have been signed, exporters said. Indian rice is already uncompetitive in the global market because of high minimum support prices given to farmers, a strong rupee and lower prices in Thailand, Pakistan and Myanmar, they said India exports rice mainly to Africa, the US, Europe and Southeast Asian nations. The renewed scheme was expected to include non-basmati rice from husked brown rice, parboiled rice and broken rice.
The Directorate General of Foreign Trade, a unit of the commerce ministry, has referred the matter to the ministry of finance and once approved, it will go to the Election Commission of India for the final nod, said exporters.
“As of now, all non-basmati rice exports are at a standstill due to non-clarity in the policy. No buyer wants to take a position at this stage,” said BV Krishna Rao, president of the Rice Exporters Association. The incentive will make us competitive in the global market, he added.
Under MEIS, exporters get a certificate or scrip from the DGFT that can be traded. For exports of $400, a company would get a $20 MEIS scrip, which it can sell. According to Rao, rice exports fell to 6.2 million tonnes in the 10 months ended January 31 from 7.1 million tonnes in the same period a year earlier.
“This financial year, exports will be similar to the previous year, but if MEIS is not extended, then in the 2019-20 season we will see a drop in rice exports,” said Rao.
Rao said that while India was selling par boiled rice at $400 a tonne, the same variety from Thailand was being offered at $380.
Lakshya Agarwal of KLA Exports said it hasn’t signed any new rice contracts with buyers.
“We are waiting for some clarity from the government on MEIS before signing any future contracts. The margins are 2% to 3% in the trade and we see it becoming non-viable to export,” said Agarwal.
He said MEIS had helped India’s exports, apart from ensuring that farmers get the minimum support price.
“If the scheme is not extended, then prices in the domestic market will crash. Already in the past one month, prices of rice in Raipur mandi have moved from Rs 2,500 a quintal to the current price of Rs 2,400 per quintal,” he said.
By BOA Bureau