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Basmati exporters seek government help as shipments fall

Exporters now want the government to restore an interest subvention scheme discontinued in March 2014 to help them.

, ET Bureau|
Nov 03, 2014, 04.00 AM IST
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Exporters now want the government to restore an interest subvention scheme discontinued in March 2014 to help them.
Exporters now want the government to restore an interest subvention scheme discontinued in March 2014 to help them.
NEW DELHI: Higher taxes in importing countries, along with absence of government support at home, are squeezing India’s basmati exporters, say trade executives. Shipments of the premium quality aromatic rice have already taken a hit.

"Basmati exports till September have dropped by approximately 20 per cent to 2.2 million tonnes compared with the previous year," said Mohinder Pal Jindal, president of the All India Rice Exporters Association.

Exporters now want the government to restore an interest subvention scheme discontinued in March 2014 to help them, with some of them demanding the government to enhance it to 5 per cent from the earlier 3 per cent.

In 2013-14, India exported 10.5 million tonnes of rice, helping keep its top position in the global market for the staple grain. Out of this, more than 4 million tonnes were basmati, with Iran being the biggest market. "Iran has increased import duty from 10 per cent to 45 per cent, Pakistan is offering competitive prices in global market," said Jindal. "We are getting very less orders and want government to support the sector."

A sizable chunk of India’s basmati rice output is exported. Exporters usually store basmati rice for one-two years, a process calling 'ageing' to improve the aroma. Several of them are sitting on such stocks and in the absence of government support and because of high interest on loans, companies say they are set to make losses.

According to industry executives, the commerce ministry and the Agricultural & Processed Food Products Export Development Authority (Apeda) have recommended extension of the interest subvention scheme. The finance ministry has to make a final decision.

"Export margins are very less with high cost of rice, interstate taxes, electricity cost and service taxes. In order to compensate and to offset other disadvantages, an incentive in the reinstatement and increase in interest subvention from 3 per cent to 5 per cent is requested," said Gurnam Arora, joint managing director of Kohinoor Foods.

The average price realisation of Indian basmati in global market has come down to $1,100 a tonne from $1,450 last year. This has led to a drop in basmati prices in the local wholesale markets, too.

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