NEW DELHI (February 06 2009): India is planning to further subsidise basmati rice in an attempt to push Pakistani basmati rice out of international market. Commerce Secretary G K Pillai here said the government is looking at another cut in the minimum export price (MEP) for the basmati rice to help domestic players compete with their counterparts from Pakistan. “We have asked the state governments to forward their views on lowering of price for exports,” Pillai said on the sidelines of an International Conference here.

The final decision has to be taken by the empowered group of ministers (EGOM),” the commerce secretary said, indicating that the high-powered panel headed by External Affairs Minister Pranab Mukherjee will also decide the quantum of the price cut.

The government last month abolished the export duty on basmati and reduced the MEP to $1,100 per tonne from $1,200 per tonne. State governments have now demanded a further reduction in the MEP of basmati in the backdrop of falling prices of the premium rice variety in the domestic market. But exporters said the cut was not enough to compete with exports from Pakistan specially since they had also faced payment defaults from some markets. India and Pakistan are the only two countries that have the claim on geographical indication for basmati, long grain rice famous for its unique aroma.

The government had placed restrictions on export of basmati rice in April last year as part of its overall attempt to check the local supply. India’s basmati exports have declined by 12 percent to 760,000 tonne in the April-January 2008-09 because of the restrictions. With inflation under control now and domestic prices of basmati declining, the government is now easing restrictions on exports.

The curbs on Indian exports helped exporters from Pakistan to increase their share in the global markets, particularly in the middle-east and European countries. iftikhar gilani

Courtesy Daily Times