Basmati rice exports likely to touch Rs.22,500 cr in FY18: ICRA

The Dollar Business Bureau

The exports of Basmati rice from India is expected to touch Rs.22,000–Rs.22,500 crore in financial year 2017-18 and the volume to about 4.09 million tonne primarily supported by a growth in average realisations, said the credit rating agency ICRA Ltd in a report on Wednesday.

“We expect the export volumes in FY17 to be around 4 million tonne (almost similar to the volumes in FY2016). However, muted average realisations are expected to keep the value of these exports to under Rs.21,000 crore, against Rs.22,718 crore in FY16,” said Deepak Jotwani, Assistant Vice President, ICRA to PTI.

“In FY18, the value of exports is likely to grow to Rs 22,000–22,500 crore, with export volumes growing to around 4.09 million tonne and supported by an increase in average realisations,” he added. This could possibly lead to an increase in the prices of Basmati rice in the coming fiscal.

Revival of imports by Islamic Republic of Iran will be eagerly watched by the rice industry as the country has the potential to give a boost to the exports, he added.

Over the past few years, the basmati rice industry saw moderation on account of subdued demand in international markets, partly on the back of delay in revival of imports by Iran that wanted to promote its own domestic production of rice.

However, the financial year 2016-17 has witnessed some demand stabilisation, the rating agency said, while adding that after touching Rs.29,300 crore in 2013-14, the value of exports of basmati rice went on a declining trajectory.

Though the volumes recorded some growth in the past few years, the drop in the value is mainly due to the continuous pressure on the average realisations, which declined from a maximum of Rs.77,988 a tonne in 2013-14 to Rs.56,149 a tonne in 2015-16, on account of moderation in the demand of Basmati rice in the international market, ICRA said.

For the next financial year, the industry is likely to be benefitted from the increasing paddy prices, it said.

After considerable decline in the procurement season of 2015-16, the prices of basmati paddy have steadied by 20-25% across several varieties, mainly on account of the relatively lower output, in the last procurement season of October-December 2016, ICRA said.