NEW DELHI: Belying expectations of upswing, the rice exports from India have witnessed a downward trend owing to elections that took place in some states and upcoming general elections apart from global geopolitical factors in the ongoing season.
While global factors pertain to recessionary trends in key export markets and persisting payments issue with Iran, the domestic factors include among others, big traders avoiding taking long positions due to impending Lok Sabha election in the early months of 2019, as a caution before the results could reflect in amended export terms with any change in political equations.
India is the world’s largest rice exporter and in 2017, it had accounted for 25% of the global rice trade valued at US$ 7.73 billion, primarily due to its competitive cost advantage. India’s net rice exports touched 12.7 million tonnes (MT) last year. Basmati exports had stood at about 4 MT with almost 80% of the consignment going to the Gulf countries, including Iran.
The decline started from August this year ahead of state elections. Although arrival of new season crop was also awaited. And during April-November 2018, exports of basmati and non-basmati are down 6 per cent to $4.67 bn. All the fall has been attributed to lower exports of non-basmati rice.
In the past, the change of government brought about export ban on staple food grains, which caused economic loss to exporters holding large inventories meant for exports. “At the same time, the banks have become jittery about extending credit to exporters due to stricter norms. This has resulted in complex paper works and delays, which has also affected trade,” a north India based exporter said.