50% US tariff to hurt Indian basmati, boost Pakistan's share
This development is likely to severely affect Punjab, the highest producer of basmati rice in the country, accounting for 40 per cent of production, followed by Haryana and other states. While the total market of basmati rice in the United States is of approximately 5 lakh metric tonnes (LMT) of this at present India exports about 3 LMT approximately worth $350 million and rest 1.8 LMT is exported by Pakistan.
As presently the average price is $1200 per metric tonne (MT) and with the new tariff another $600 per MT will be added thus it will be $1800 and on the other hand Pakistan, which enjoys low tariff of 19 per cent as the their basmati will cost only $1450 a difference of $ 350 per MT.
In the 2023–24 fiscal year, a total of 59.42 lakh metric tonnes (LMT) of basmati rice was exported from the country. Of these exports, basmati rice was mainly sent to five countries: 7 LMT to Iran, 11 LMT to Saudi Arabia, 8 LMT to Iraq, 3 LMT to Yemen, and 3 LMT to the US, with the remainder going to other countries.
According to Agricultural and Processed Food Products Export Development Authority (APEDA) under the Union Ministry of Commerce and Industry India's foreign exchange earnings from basmati rice exports were Rs 48,000 crore in 2022, out of which Punjab contributed at least 40 per cent.
Speaking to TNIE, Ranjit Singh Jossan, Vice-President of the Basmati Rice Miller and Exporter Association, said, `` The US imported nearly 3 lakh metric tons of Indian Basmati last year, valued at approximately $350 million. The additional 25 per cent tariff imposed by the US on Indian basmati rice exports poses a serious challenge to the industry, effectively increasing the total duty to 50 per cent.
This move will significantly reduce India's price competitiveness. Currently, Indian basmati is exported to the US at an average price of $1200 per metric tonne (MT) and with the new tariff another $600 per MT will be added thus it will be $1800, making Indian rice significantly more expensive than that of competing countries, especially Pakistan, which enjoys low tariff of 19 per cent as the their basmati will cost $1450.
Thus the demand for Indian rice in the US will almost disappear, putting our centuries-old market at risk of vanishing.'' Jossan added that the consequences are manifold, `` First, India could lose substantial market share to Pakistan and other exporters of aromatic or specialty rice varieties. Second, the US, which historically accounts for 8 to 10 per cent of India's basmati exports, will witness a sharp decline in imports.
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