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M.R. Subramani

CHENNAI, Jan. 23

THE Government is considering implementing price advisory for export of basmati rice, especially for shipments to the European Union (EU).

"We are considering bringing in price advisory for basmati exports. This is mainly aimed at exports to the EU where we can send this duty-free," Commerce Ministry sources told Business Line.

Price advisory will mean that the Government can, through the Agricultural and Processed Food Products Export Development Authority (Apeda), advise exporters to ship basmati rice at a fixed price. In effect, this could mean that a base price could be fixed for basmati exports. Apeda is the agency that monitors rice exports.

"We are considering price advisory so that exporters don't play any mischief with basmati shipments, particularly with regard to quality," the sources said.

The move is primarily aimed at ensuring that the EU allows all basmati exports duty free.Basmati prices should be above a particular level to avail this facility.

According to market sources, Indian premium basmati is quoted at $650-670 a tonne f.o.b. In contrast, Pakistan basmati is quoted at $553-557 a tonne f.o.b. The move to go in for price advisory is also aimed at facing competition from Pakistan, which, too, enjoys a duty-free import in to the EU.

Besides, the move would ensure quality of Indian basmati, which is said to be better than the Pakistani varieties. A few months ago, Pakistan had gone on the offensive, especially in the Gulf, portraying Indian basmati in bad light.

Trade sources said introduction of the price advisory would guarantee that all basmati shipments adhere to strict quality standards.

As per the Government's plans, any shipment priced 10 per cent lower than the advisory price would be checked for quality.

"The base price would check scrupulous exporters from mixing cheaper rice with basmati for selling it at a lower rate," the sources said. It would also counter complaints from the EU on such shipments, they said.

Basmati exports have begun stabilising, though during January-July 2001, it declined to 4.05 lakh tonnes from 5.45 lakh tonnes in the previous year.

During the 2000-01 fiscal, basmati exports were 8.5 lakh tonnes valued at Rs 2,165 crore, up from 6.06 lakh tonnes worth Rs 1,882 crore during 1999-2000.

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