Bad news for India’s basmati rice exports as Iran imposes caps on imports, prices

By | February 9, 2017

Bad News For India

India’s basmati rice exports to Iran, a major destination for the long-grained aromatic rice from the country, is expected to take a big hit after Tehran put upper limits for import and consumer prices of the cereal. While India’s recent exports of the rice to the West Asian country cost the importer around $950 per tonne (landed price), the ceiling price imposed is $850 a tonne and the maximum consumer price set is $ 1.15 a kg. Clearly, realisations of Indian exporters will diminish under the price caps.
“This is unilateral imposition of a virtual import tariff. Iran government must realise that prices are decided by demand and supply… It is unfair to impose such restrictions,” a leading rice exporter told FE on condition of anonymity.
Iran had been the largest importer of PUSA 1121 variety of basmati rice from India; however, in fiscal 2015-16, India’s exports to Iran almost halved (see chart).
Sources said Iran is saddled with excess stocks of basmati rice as FY14 imports of 1.4 million tonnes from India was not exhausted while merchants continued to contract more imports in subsequent years. The high carry-forward stock resulted in shipment to Iran falling to around 900,000 tonnes in the FY15 and further to 700,000 tonnes last fiscal.