 "Is India losing out to Pakistan in basmati rice war?")
India might lose out to Pakistan in the basmati rice war this year. New Delhi’s shipments of the distinctive long-grain variety of rice are expected to plunge in 2024, as Pakistan offers the staple at lower prices amid a surge in production, according to a Reuters news agency report.
India’s rice output could also fall for the first time in eight years owing to below average rainfall, the government said in a statement on Thursday (29 February). According to the Ministry of Agriculture and Farmers Welfare, rice production is likely to decline to 123.8 million metric tonnes in the crop year to June, the news agency reported.
Let’s take a closer look.
Why India’s basmati rice exports could fall
India’s basmati rice shipments may dive as Pakistan provides competitive prices to buyers. The rival countries are the only global exporters of this premium variety of rice.
In 2023, India’s basmati rice exports stood at 4.9 million metric tonnes, an 11.5 per cent increase from a year earlier, industry officials told Reuters. This came despite the Centre first imposing a minimum export price (MEP) on shipments of the aromatic rice at $1,200 per tonne last August and later reducing it to $950 in October.
Indian basmati rice exports were hit in September and October last year after the MEP was imposed but they “quickly recovered”, a New-Delhi-based exporter told Reuters.
Impact Shorts
More ShortsPunjab millers had warned at the time that the export curbs on basmati rice would harm farmers and traders in rice-growing states and favour Pakistan’s export industry eventually, Indian Express reported.
Basmati rice exports are a major source of revenue for India. As per the government data, shipments of the fragrant rice helped India fetch $5.4 billion last year, an almost 21 per cent jump from 2022 due to higher prices.
The domestic consumption of the basmati rice is just 2-3 per cent of the total output. Basmati crops are not acquired by the Indian government but by private traders and exporters, noted Indian Express.
Although India’s shipments to Iran, the South Asian country’s biggest buyer of basmati rice, reduced by 36 per cent in 2023, there were higher demands from Iraq, Oman, Qatar, and Saudi Arabia that helped bridge the gap, according to Reuters.
Indian basmati rice exports started dwindling this January, and could plunge further in the near term “as buyers delay purchases due to increased freight costs caused by disruptions in shipping via the Red Sea”, Vijay Setia, a leading exporter based in Haryana, was quoted as saying by the news agency.
Pakistan may benefit from India’s situation. “Last year, buyers were hustling to stock up when Pakistan was facing production issues. This year, however, Pakistan offers lower prices than India due to increased production,” Setia added.
According to Chela Ram Kewlani, chairman of the Rice Exporters Association of Pakistan (REAP), Islamabad’s total rice shipments are likely to surge to 5 million tonnes in the 2023-24 financial year, a jump from 3.7 million tonnes last year.
India and Pakistan’s basmati rice war
Being the only global suppliers of basmati rice, India and Pakistan have long been competing to dominate the international market.
While India grows 34 varieties of Basmati, Pakistan has 24. New Delhi has been protecting Basmati since the late 1990s. As per a Le Monde report, when a US brand tried to file a patent on “Basmati” rice varieties grown in Texas, both India and Pakistan objected and won the case.
India’s first step to protect Basmati was to define the geographical production zones for the fragrant rice. These include Punjab, Haryana, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Jammu and Kashmir and Delhi. Pakistan could only recognise growing regions for Basmati in 2021, the report added.
The two rival nations are also at war over India’s application in July 2018 for a Protected Geographical Indication (PGI) from the European Commission to get the exclusive right to use the term “Basmati” in the European Union, noted Le Monde. Pakistan has vehemently opposed the move.
PGI tag “highlights the link between the geographical region concerned and the name of the product, when a particular quality, reputation or other characteristics are essentially due to the geographical origin.”
“India and Pakistan have been exporting and competing in a healthy way in different markets for almost 40 years… I don’t think the PGI will change that,” Setia, former president of the Indian Rice Exporters Association, had told AFP news agency in 2021.
As per a businessline report last December, the EU is planning to provide the PGI tag to Indian basmati rice, a move that will surely irk Pakistan. So far, only Indian Darjeeling tea enjoys the PGI status.
With inputs from agencies
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