KRBL, LT Foods shares rise as India cuts floor price for basmati rice exports

News agency PTI reported that the commerce ministry, in a communication to the Agricultural and Processed Food Products Export Development Authority (APEDA), said: “It has been decided to revise the price limit for registration of contract for export of basmati rice from $1,200 per tonne to $950 per tonne."

The government had imposed a $1,200 per tonne minimum export price (MEP) on basmati rice shipments earlier in August to keep a lid on local prices ahead of key state elections.

On October 15, it extended the notification for an indefinite period. But, the very next day, the ministry issued a statement saying the review of the MEP of $1,200 per tonne levied in August was still under active consideration.

"The reduction will reinstate competitiveness of Indian basmati rice shipments at the global markets. Exporters are now working towards regaining the lost ground," said Atul Garg, managing director at GRM Overseas, a leading exporter.

India and Pakistan are the leading exporters of basmati rice. New Delhi exports more than 4 million metric tonnes of basmati, the premium long-grain variety famed for its aroma, to countries such as Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates and the United States.

India is set to produce more basmati rice this year than the previous year as farmers have expanded their cultivation areas following record returns last year, according to a Reuters report.

However, farmers were struggling to sell paddy because millers and traders stopped coming to key wholesale markets to make purchases, Garg said.

"Now they will start buying paddy, which will help stabilise paddy prices that have corrected nearly 20% in the last two months," he added.

India, the world's biggest rice exporter, has also curbed exports of non-basmati rice varieties.