Source: The Economic Times, Mar 27, 2019
The Indian basmati rice industry is on the verge of clocking its highest ever exports of around Rs. 30,000 crore in FY2019 (previous high of Rs. 29,300 crore in FY2014), according to an ICRA report released on Wednesday.
The growth has been fuelled by considerable firming up of average realisations, strong demand from Iran and steady increase in paddy prices for three years in a row. As per an ICRA note, the momentum of the current fiscal is likely to percolate into the next fiscal, FY2020 as well with expectation of 4-5% growth in exports, given the high base.
Elaborating further, Mr. Deepak Jotwani, Assistant Vice President, ICRA, says, “It is important to note that this growth has been despite some challenges that surfaced during FY2019 – pesticide residue issue leading to a decline in exports to European Union (EU), Saudi Arabia mulling adoption of stringent pesticide rules, payment issues from some Iranian importers and uncertainty due to imposition of trade sanctions on Iran by the US Government. The stringent pesticide norms by EU led to loss of exports worth around Rs. 1,000 crore in 9MFY2019, and the same could exacerbate going forward. Nevertheless, the fact that EU contributed around 8% to the exports till FY2018, allowed for the loss to be compensated by exports to the Middle Eastern countries. Further, the industry has been able to tide through most of the other issues, as demonstrated by steady increase in exports to Saudi Arabia and establishment of the rupee payment mechanism to facilitate future trade between India and Iran, its prime market for Basmati exports. However, overall, tightening of pesticide residue norms by key importers could be a long-term risk for the industry.” Read the rest of this entry »