Basmati Rice exports growth to moderate in FY20: report

Indian rice export prices slipped this week as demand from Africa remained sluggish. Prices of 5% broken parboiled variety in top exporter India were quoted at around $371-$375 per tonne this week, down from $373-$379 a week ago, Reuters reported.

India’s rice exports plunged 26.5% in April-July from a year ago to 3.14 million tonnes, a government body said earlier this month.

However, Indian basmati exports are facing headwinds in the current fiscal, after two years of strong growth, rating agency ICRA said in a research note.

The ICRA note says that with uncertainty over level of exports to Iran as well as likely moderation in average export realisations, basmati rice exports are expected to be muted in FY2020. This is after basmati rice exports in FY2019 were at an all-time high at Rs. 32,806 crore, primarily led by aggressive buying by Iran, that enabled healthy growth in volumes besides favourable pricing.

Elaborating further, Mr. Deepak Jotwani, Assistant Vice President, ICRA, says, “There is increased uncertainty over level of imports by Iran going forward in light of ongoing trade sanctions; and tighter pesticide residue norms continuing to weigh on exports to European Union (EU). Also, some changes in import policies proposed by Saudi Arabia are likely to come into effect by the end of the year. While EU is a comparatively smaller market, Iran and Saudi Arabia are leading destinations, accounting for 50-55 per cent of Basmati rice exports from India.”

According to ICRA, a more long-term concern is that the reserves (receivables against crude oil exports to India done earlier) being utilised by Iran for paying for its Basmati rice imports, are declining with crude oil imports by India from Iran discontinued since June 2019. This enhances the uncertainty on future trade with Iran, considering the ongoing trade sanctions.

While some comfort can be drawn from the fact that basmati rice forms a part of the staple diet of Iran and Saudi Arabia; however, any considerable decline in level of imports by these countries can have a depressing impact on basmati rice prices and exert pressure on the industry participants.

On the supply side, basmati paddy prices continued to firm up for three years in a row. However, given the better earnings garnered by farmers in the last season, Basmati paddy production is estimated to be higher in the current fiscal. This coupled with delay in resumption/lower level of imports by Iran, if any, is likely to keep paddy prices under check in the current year’s procurement season. This will have a bearing on Basmati rice prices in the next calendar year as well as overall Basmati rice exports in FY2021

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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