India suspends Basmati rice exports below $1,200/mt FOB

India has suspended, with immediate implementation, exports of Basmati rice valued below $1,200/mt FOB, the Ministry of Commerce Industry said in a release Aug. 27.

"Contracts for Basmati exports with the value of $1200/mt only and above should be registered for issue of Registration – cum – Allocation Certificate (RCAC)," the release said.

Basmati rice exports below the minimum export price may be allowed again once the chairman of the committee set up by the Agricultural & Processed Food Products Export Development Authority (APEDA) submits a report within a month on the variation in prices of different Basmati varieties and how this route is used to export non-Basmati white rice.

The government said the move was prompted by reports that non-Basmati white rice is being exported under the HS codes of parboiled rice and Basmati rice.

"It has been noted that there has been large variation in the contract price of Basmati being exported with lowest contract price being $359/mt in backdrop of average export price of $1,214/mt during the current month," the release said.

Trade sources said that the current floor price was high and it would mean an exclusion of a large chunk of Basmati rice exports.

While there was no export data available on the varieties of rice impacted, market participants also believed it would have a bearish impact on domestic prices.

"It is practically impossible to absorb an almost $200/mt upside on grades like 1509 or 1401 Sella varieties which are the most popular ones. Not even considering Sugandha etc.," an exporter said.

Platts assessed Indian parboiled Basmati varieties 1509, Pusa, and 1121 all well below the floor price at $910/mt, $1,046/mt, and $1,054/mt FOB FCL respectively on Aug. 25, according to S&P Global Commodity Insights.

India has taken several measures to control the increase in local prices of rice over the last one year.

In July, India banned the export of non-Basmati white rice and on Aug. 25 imposed a duty of 20% on non-Basmati parboiled rice. India had already banned the export of broken rice in September 2022.

India is the largest exporter of rice in the world exporting 4.55 million mt of Basmati rice in 2022-23 (April-March) and 17.8 million mt of non-Basmati rice out of which 7.8 million mt was parboiled and 6.4 million mt was white rice, according to Ministry of Commerce data.