The export duty on basmati rice will not curtail inflation but will lead to loss of export market, Ficci said on Sunday.With a view to discourage exports, the government imposed an export duty of Rs 8,000 a tonne on basmati rice. The government has also lowered minimum export price (MEP) from $1,200 to $1,000 a tonne.
Ficci said the total consumption of rice in India is close to 89 million tonnes, of which, the consumption of basmati is a paltry 0.2 per cent. Even this meagre domestic consumption is restricted to the upper income consumers who have high disposable incomes.Ficci in a letter to the Prime Minister said the twin measures hold out the possibility of loss of export market.
Meanwhile, Saudi importers are already threatening lawsuits against Indian rice exporters for default on commitments and have started negotiating with Pakistan and Thailand for its rice requirements.
Indian exporters have told the importers in Saudi Arabia that they can not absorb the additional duty as their margins are thin. They have said that the Saudi importers will have to bear this additional duty. Meanwhile, the Riyadh chamber of commerce and industry has asked the Indian government to withdraw this duty.
The market lost by the Indian basmati rice farmers will in turn, help their Pakistani counterparts.