Located in the southern part of Asia, India is the largest rice exporter in the world. The Asian nation exports different varieties of rice to 150+ countries around the world and commands a mammoth 40 per cent share in the global rice trade.
Different varieties of Indian rice enjoy strong demand all year round; however, Indian basmati rice has a special place in the global rice market. Data suggest that basmati rice shipments bring in an estimated sum of Rs 12,000 crore every year for the Asian nation and is a major source of foreign revenue.
Owing to strong global demand, Indian rice exporters earn huge revenue and decent profits through basmati rice exports and recently, they have been receiving requests from overseas buyers to advance shipments that are supposed to take place later this year.
The Background
In a surprise move earlier this month, world’s largest rice exporter imposed a ban on exports of non-basmati white rice after retail prices jumped by 3 per cent in domestic markets of India.
Late but heavy monsoon rains led to crop damage and in turn fueled up prices of the commodity in the domestic markets of the country and as a result, the GOI had to impose restrictions to stabilize prices.
Feared by non-basmati white rice export ban, buyers are now requesting rice exporters of the country to advance shipments of basmati rice.
Normally buyers sign long-term contracts with rice exporters who assure them a certain volume of the commodity every month. However, in this case, buyers are fearful that GOI might in a surprise move restrict basmati rice exports as well, and hence are requesting advance shipments.
Statements by the Market Participants
Mr. Atul Garg, Managing Director of leading basmati rice exporting firm, GRM Overseas said “Buyers are requesting early shipments because they fear that the government might put restrictions on exports of basmati rice as well.”
Efforts are on to pacify buyers. Rice exporters are resorting to data to put the queries of the buyers to rest. They cited that apart from 2008 when GOI imposed export taxes, Indian basmati rice exports was not banned in any year.
However, despite this, buyers have their apprehensions still in place. They believe that in a surprise move, the GOI banned exports of wheat in 2022 which was followed by restrictions on sugar and rice exports, later last year.
The Bottom Line
India is the leading rice exporter in the world and any disruptions in rice supply from India is bound to create troubles for nations dependent upon it for their rice needs and India’s non-basmati white rice export ban has made foreign buyers fear of a possible basmati rice export ban as well.
Acting on the same, they are now requesting Indian basmati rice exporters for early shipments of the staple and market participants are doing their best to put their fears to rest.
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