India mulling dropping $200/ton export duty on basmati rice

India is considering to abolish $200 per ton export duty on basmati rice, imposed last year, as its plan to capture major international markets of this commodity, local exporters said.
"This move of our biggest competitor to reduce prices of its basmati rice will affect badly Pakistan's rice exports as the Indian basmati rice would be available at much lowers prices in the international markets than Pakistan", they said.
At present, the price of Indian basmati rice is $1250 per ton, while Pakistan is exporting its rice of same variety at $1200 per ton. The Indian basmati rice would be available at $1050 per ton after abolishing $200 per ton export duty.
Although Pakistan had become the third largest rice exporter in the world, after Thailand and Vietnam, during the last six-month period (Total exports $1.18 billion), its exports declined by 23 percent in December 2008 as compared to December 2007. Pakistan and India export almost same quantity of basmati rice every year. However, Pakistan's exporters would not be able to compete in the international market due to the huge price difference, Abdul Rahim Janoo, Chairman of Rice Exporters Association of Pakistan (Reap) said.
He said that rice prices had shot up suddenly after intervention of government institutions, including TCP and Passco in the rice trade. The price of basmati rice has increased by 20 percent, while the prices of non-basmati varieties had increased by 30 percent in the local market, he added.
To discuss the current situation of rice trade, the rice exporters' body approached Prime Minister Yousuf Raza Gilani. In this regard, a meeting of 12-member Reap delegation with the Prime Minister was scheduled for Saturday in Karachi. However, this meeting had to be rescheduled for Sunday due to PM's busy schedule. Unfortunately, the meeting had to be postponed and now the matter is likely to be discussed some time this week. The Reap chairman said that it was an important matter to be discussed immediately, and they would try to approach the Prime Minister in this regard.
He said that over 70 percent rice mills had shut down in Punjab and expressed fear that over 0.5 million workers could lose their jobs. On the other hand, almost same situation would be witnessed in Sindh in the next few months, he said, and demanded that the government should take supportive measures immediately to save the country's rice trade, which is the second biggest foreign exchange earning commodity.