Jump in basmati exports fails to cheer traders

Vijay C Roy
Tribune News Service
Chandigarh, July 19

A record shipment to Iran in the first two months of the current fiscal has propelled basmati exports to a new level. However, the growth in exports has failed to cheer exporters, especially those who have exposure to Iran, as their payments are being delayed. According to estimates, payment for 1 lakh tonne of basmati worth Rs 1,000 crore has been delayed. 

Perturbed over the issue, the exporters have sought intervention of the Central government into the issue.

According to Agricultural and Processed Foods Exports Development Authority, total basmati exports from the country touched 8.64 lakh tonnes during April-May 2019 as compared to 7.45 lakh tonnes during the corresponding period previous fiscal. Out of this, basmati exports to Iran were 3.33 lakh tonnes as compared to 2.41 lakh tonnes in 2018-19 during the same period. 

Iran has been a major market for Indian basmati and accounted for around 34% of the country’s overall basmati exports during 2018-19.

“The payment against Indian basmati shipments to Iran has got stuck at Iranian ports as the Government of Iran has stopped issuing Indian currency (at concessional rate) to Iranian rice importers without any prior notice. According to estimates, around 1 lakh tonne of basmati valued at around Rs 1,000 crore is lying at Iranian ports,” said Vinod Kumar Kaul, executive director, All India Rice Exporters Association.

The exporters have requested to the Commerce Ministry to take up the matter with the Iranian authorities to help resolve the issue so that they get their payments and make further shipments.

“Due to this uncertainty, Indian exporters have held back large consignments meant for Iran at their mills and ports,” Vijay Setia, president, All India Rice Exporters Association.

Exporters feel the delayed shipment will lead to higher incidence of overhead expenses and interest burden.

If the delayed payment issue persists for a longer time, it might hit the earnings of farmers from the region as Punjab and Haryana account for over 70-75% of the total volume-wise exports. According to Kaul, in the current scenario, the market has shown a price slump of around 15%, which will affect the remuneration to farmers once the new crop flows in. 

Gurnam Arora, joint managing director, Kohinoor Foods, said this year volume of exports to Iran may touch 14 lakh tonnes as compared to 11 lakh tonnes in the last fiscal if everything is favourable for the trade between the two nations.