Basmati turns into $5-b export product

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Basmati exports have hit a new record both in volume and value during fiscal 2024. As per latest data, shipments during April-Feb crossed the $5.2 billion with volumes touching a new high exceeding 4.67 million tonnes.

While the exports for FY24 will create a new record after incorporating the figures for March, the prevailing geopolitical tensions in the Middle East are likely to weigh on shipments in current fiscal. The trade is worried about the emerging situation in Middle East, which accounts for over 70 per cent of the basmati exports.

Sources said the latest conflict in the region between Iran and Israel will pose major headwinds for the Indian exporters in the new financial year. “We are keeping our fingers crossed,” trade sources, while declining to hazard any guess on the potential fallout of the escalating conflict. The Indian exporters have already borne the brunt of recent attacks in the Red Sea region, which has resulted in higher shipping costs and transit time to destinations such as the Europe and the US.

Price rise

However, analysts feel the prevailing tensions may lead to higher exports and prices. “Currently, Iran and Iraq have sufficient stock to prolong if there is a geopolitical fallout. Other Gulf countries, in particular Saudi Arabia, Oman, Qatar and UAE, might not have sufficient stock. Therefore, basmati rice exports might witness fresh round of export orders. The prices will also witness significant increase due to additional demand and risk premium,” said S Chandrasekaran, trade analyst and author of the book Basmati Rice: The Natural History and Geographical Indication.

“In the current fiscal, Iran will increase its rice purchase by 30 per cent. The share of basmati rice imports will be dependent on Iranian government food policy,” Chandrasekharan added.

Also read: Global turmoil pulls down India’s goods exports by 3.1% to $437 billion in FY24

In the April-Feb period, the Basmati shipments were up by 22 per cent in value terms. Shipments to Saudi Arabia, the largest buyer, topped $1.1 billion during April-Feb as compared to $920 million in the same period last year. In volume terms, the exports to Saudi Arabia were up at 9.61 lakh tonnes (lt) compared with 8.51 lt.

Iraq has emerged as the second largest buyer with both volume and value more than doubling over last year. Iraq bought 7.02 lt of Indian basmati during April-Feb over previous year’s 3.13 lt. Basmati shipments to Iraq were valued at $757 million ($321 million in April-Feb last year).

Iran has been pushed back to the third slot with shipments in value reducing to 6.44 lt during April-Feb (9.27 lt). Basmati exports to Iran were down at $652.70 million during April-Feb as compared to same period last year’s $911.02 million.