GOI Removes Basmati Rice Minimum Export Price, Raises Edible Oil Charges

Nitin Konde, Apoorva Bajj

Sep 16, 2024 — 3 min read

GOI Removes Basmati Rice Minimum Export Price, Raises Edible Oil Charges

According to a statement released by the Ministry of Commerce and Industry on 14 September 2024, the minimum export price (MEP) criteria for basmati rice exports has been eliminated by the Union Government.

To increase the incomes of farmers, the decision has been made to permit the export of basmati rice, which is a GI-tagged type that is considered to be of the highest quality. In the announcement, it was emphasized that this decision was made in consideration of the sufficient availability of rice within the country as well as continued worries regarding trade.

"We greatly welcome the government's decision to remove the MEP on Basmati rice. The timing of this strategic move coincided favorably with the imminent harvest of the new crop. With the MEP removed, Indian exporters now have the power to offer Basmati rice at far more competitive rates on a global scale, seemingly primed to drive a huge surge in export volumes. With new crop sales and export orders set to be finalised, this decision provides greater clarity for importers worldwide regarding India's policy direction. Moreover, this change is expected to benefit farmers by boosting income and price realisations, as increased demand in the short term is likely due to the competitive pricing from Indian exporters," stated Akshay Gupta, Head - Bulk Exports, KRBL Limited.

APEDA to Closely Monitor Export Contracts

To avoid basmati rice from being priced unreasonably and to guarantee that export procedures are transparent, the Agricultural and Processed Food Products Export Development Authority (APEDA) will rigorously supervise export contracts.

In August 2023, a temporary measure was implemented that established a floor price for basmati rice exports at USD 1,200 per metric tonne (MT). As a result of a limited supply within the country and rising costs for rice on the domestic market, this decision was made. It was also intended to avoid the misclassification of non-basmati rice as basmati during exports. This was done because the export of non-basmati white rice is restricted to satisfy domestic demand.

On the other hand, in October of 2023, the government decided to lower the floor price to USD 950 per MT after receiving comments from various trade associations and stakeholders.

Hiking Duty on Edible Oil to Increase Oil Seed Crop Demand

A post on the social media site "X" made by Shivraj Singh Chouhan, Minister of Agriculture and Farmers Welfare, declared that the government has decided to hike the basic duty on refined oil to 32.5 percent. This is one of the other measures that would affect farmers. As a result of this action, it is anticipated that the demand for mustard, sunflower, and groundnut crops will increase, which will cause farmers' incomes to improve.

Farmers' advancement is a priority of Prime Minister Narendra Modi's government. Increasing the basic tariff on refined oil to 32.5% is something that has been decided upon. Mustard, sunflower, and peanut crops will see an increase in demand as a result of this. According to Chouhan's statement mentioned in a media report, farmers would earn higher prices for these products, and the expansion of refineries in rural and small areas would also lead to an increase in employment prospects.

In addition, the government has increased the import duty on edible oils from 0% to 20%. Chouhan went on to say that the overall effective duty will amount to 27.5% if other components are taken into consideration during the calculation. A greater quantity of soybean meal, which will be shipped overseas, will be produced as a result of this decision. As Chouhan mentioned in his post on X, other industries that are associated with soy would also get benefits.