Pay now, adjust later: Rice exporters cook up ways to skirt basmati curbs

Basmati rice exporters are negotiating with global buyers for a price exceeding $1,200 per tonne for new orders now and adjust the price against future orders when the government's move to temporarily halt exports of this aromatic variety of rice is rescinded.

India on Sunday announced a temporary halt of export of any basmati rice consignment for less than $1,200 a tonne, while shipments contracted above that price threshold will continue to be allowed. The move was to restrict possible "illegal" shipment of white non-basmati rice in the garb of premium basmati rice. This will remain effective till October 15, 2023.

Basmati rice exporters are choosing the overbilling route so that they do not lose their export markets to Pakistan, a major competitor. "For the time being exporters can only do overbilling and export rice above $1,200. They will adjust it with the buyers in future orders," said the CEO of a rice exporting company, who did not want to be identified.

India exported 4.5 million tonnes of basmati valued at ₹38,524.11 crore in FY23. Gulf nations are major buyers. Vijay Setia, former president of All India Rice Exporters Association said: "Overbilling will be possible in cases where exporters have long-standing relationships with buyers and have offices abroad."

Trade sources said overseas buyers are in touch with Indian exporters to work out a possible formula for the import of rice as they have to fulfil their domestic demand.