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Time of India
2 days ago
- Business
- Time of India
US tariff crisis puts Punjab basmati exporters, growers in peril
Chandigarh: The new US policy imposing a 50% import tariff on Indian basmati rice presents a challenge for both exporters and its growers in Punjab. This duty hike is set to make India's premium grain uncompetitive against rival Pakistan in a key global market, adding to the pressure on growers already affected by falling domestic prices. If basmati growers are compelled to switch to regular paddy, it could undermine the state's crop diversification efforts, which are essential to conserving groundwater resources. While the US market may be smaller in volume than West Asia, it is crucial to the profitability of premium aromatic varieties. This punitive tariff is set to directly benefit India's arch-rival, as Pakistan's lower tariff rate will likely shift a greater share of the US market to their exports, which currently account for 50% compared to India's 19%. The new tariffs come at a time when basmati prices are already in free fall. The cost of popular varieties like 1121 dropped from Rs 4,500 per quintal in 2022-23 to Rs 3,500 in 2023-24, with expectations of a further decline. Basmati exporters fear this price slump could make farmers abandon basmati in favour of regular paddy, which is protected by a minimum support price (MSP) of over Rs 2,400 per quintal. This shift could undermine the state's crop diversification efforts, which were put in place to address concerns over groundwater depletion. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Undo Sanampreet Singh, a progressive farmer from Fazilka, said a dip in basmati prices last season already made many growers switch back to regular paddy this year. He said basmati prices are uncertain and depend on exporters, unlike the assured procurement on minimum support price (MSP) for regular paddy, adding that if prices do not recover this season, more basmati growers would switch to paddy. Popular basmati varieties in the state like 1509, 1121, and 1718 cover over 80% of the 6.8 lakh hectares area under basmati, but have been fetching falling prices. According to Ranjit Singh Jossan, vice-president of the Basmati Rice Millers and Exporters Association, the new duty could cause Indian exports to the US to drop by 50%-80%. "US accounts for 8%-10% of India's basmati exports. New tariffs will make Indian basmati costlier by $400 per tonne, while Pakistani basmati will remain competitive. This will particularly hurt small and medium exporters who are already struggling with thin margins and unsold stock," he said. The dual threats of foreign trade disruptions and domestic supply issues could prove to be a litmus test yet for Punjab's basmati success story, said Jossan. According to Ashok Sethi, director of the Punjab Rice Millers and Exporters' Association, a good monsoon this time is expected to yield a bumper basmati crop, which typically drives prices down. This supply increase, coupled with a negative market sentiment surrounding the high US tariff, will likely cause a decline. As a result, both exporters and growers are expected to be affected, with exporters becoming more cautious in their buying. Despite the US market's relatively small volume of 2.34-3 lakh metric tonnes annually, valued between $350 million and $418 million, it remains a crucial destination for Indian basmati due to its niche clientele, he said. Punjab's basmati processing capacity nearly doubled in the last two years, but its local production is not keeping pace. Millers have historically relied on surplus basmati from Uttar Pradesh and Madhya Pradesh to operate at full capacity. However, these states are now rapidly building their own milling infrastructure, which could cut off Punjab's raw material supply. In 2022-23, Punjab's basmati processing capacity stood at around 25 LMT per annum, with 80 rice mills operating. By 2024-25, the capacity went up to 45 LMT, with over 200 rice mills now operating across the state. The rapid expansion was fuelled by strong global demand for basmati and high price realisation in the export market, especially in premium destinations like the US, Europe, and the Middle East. Stay updated with the latest local news from your city on Times of India (TOI). Check upcoming bank holidays , public holidays , and current gold rates and silver prices in your area. Get the latest lifestyle updates on Times of India, along with Raksha Bandhan wishes , messages and quotes !
New Indian Express
4 days ago
- Business
- New Indian Express
50% US tariff to hurt Indian basmati, boost Pakistan's share
NEW DELHI: With US President Donald Trump slapping additional 25 per cent ad valorem duty above the 25 per cent reciprocal tariffs that were announced on August 1 taking the total tariff burden to 50 per cent thus now the Indian basmati rice exports will bear the brunt and the gainer will be Pakistan, as the market share of this aromatic, premium rice variety from the neighboring country will increase in United States and share of Indian basmati is likely to decline sharply. 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.
Time of India
15-06-2025
- Business
- Time of India
Basmati exporters grapple with Iran conflict; Pakistan benefits via barter trade
1 2 3 4 With indesign box attached in CCI Chandigarh: Rising tensions between Iran and Israel have cast a long shadow over India's basmati rice exports, with exporters warning that any disruption to shipping through the Strait of Hormuz could cripple trade with Gulf countries and hand long-term strategic advantage to Pakistan. At the heart of the concern is the possible closure of the Strait of Hormuz — a vital maritime chokepoint through which almost 30% of global crude oil and 20% of natural gas pass. Indian exporters fear that an escalation in conflict could force ships already en route to turn back, leading to steep financial losses. "If the basmati consignments do not reach their destination, it will mean a huge loss for us," said Ranjit Singh Jossan, vice-president of the Punjab Basmati Rice Millers and Exporters Association. Iran is one of India's largest basmati buyers, accounting for more than 8.55 lakh metric tonnes in the year 2024–25, valued at ₹6,374 crore. This represents 30-35% of India's total basmati exports in peak years, with Iranian consumers preferring Indian rice for its aroma, grain length and flavour. However, delays in payments from private Iranian traders — often ranging between six to eight months — have strained Indian exporters' working capital. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Tourmaline Sock That Soothes Foot Pain and Burning TourmaRelief Undo Even state-affiliated buyers such as the Govt Trading Corporation (GTC) have taken up to 180 days to process payments, prompting some Indian exporters to redirect their shipments to lower-margin markets. Amid this uncertainty, Pakistan has moved swiftly to gain ground in Iran. Leveraging a shared land border and the absence of formal banking restrictions, Pakistan has engaged in barter trade with Iran — exchanging rice for petroleum, copper and electricity. Its advantage in logistics and payments has allowed it to consolidate market share, filling the void left by India's constrained position. "India should not let Pakistan capture a market where we have held cultural and culinary primacy for decades," said Jossan. "Regaining that lost ground may take years, if not decades." The roots of India's declining trade with Iran date back to 2019, when US sanctions prompted India to halt crude oil imports from the country. The collapse of the previous rupee-rial oil payment mechanism severed a critical channel for Iranian buyers to fund Indian imports, including basmati rice and pharmaceuticals. The ripple effects are being felt again this year. Cargo insurance premiums through the Red Sea and Persian Gulf have jumped by 20%, increasing costs for exporters. Analysts warn that further disruption in maritime trade could temporarily drive up basmati prices in Gulf countries by 5-15% and trigger inflation-mitigation measures such as subsidies or tariff adjustments by regional govts. In Punjab, growers and traders remain on edge. A similar flare-up in 2023 had already led to reduced orders and a sharp fall in the price of Basmati 1509, a key export variety. As India's strategic grip on the Iranian rice market loosens, exporters argue that a recalibration of trade policy is urgent. Without it, they warn, India risks losing not just revenue but also its longstanding cultural and commercial ties to a key consumer market. MSID:: 121848722 413 | Follow more information on Air India plane crash in Ahmedabad here . Get real-time live updates on rescue operations and check full list of passengers onboard AI 171 .
Time of India
07-06-2025
- Business
- Time of India
Beyond paddy hybrids: Basmati may just be the answer for farmers in Punjab
1 2 Chandigarh: Basmati could emerge as a viable alternative following the recent ban on hybrid and Pusa 44 paddy varieties, despite the potential short-term challenges for farmers and seed vendors. Improved market prices in some areas might help offset farmers' concerns about the fluctuating basmati prices experienced over the last few years. Last year, the Punjab govt had imposed a ban on sale of hybrid paddy seeds due to lower rice recovery and poor milling recovery. The hybrid varieties of paddy, besides Pusa 44, gained popularity among farmers because of their early maturity and other short-term benefits. Originally allowed in the early 2000s due to wet conditions in parts of Muktsar, Malout, and Gidderbaha, the use of these seeds eventually spread across Punjab, especially Gurdaspur and Amritsar in the Majha region and Jalandhar and Hoshiarpur in Doaba. Meanwhile, in 2023-24, Punjab produced 26 lakh tonnes of basmati, which increased to 32 lakh tonnes in 202425. Due to international demand, 1121 paddy is being sold at Rs 5,000 per quintal in some areas. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo Ranjit Singh Jossan, vice-president, Basmati Rice Miller and Exporter Association, said with the ban on hybrid varieties and Pusa 44, basmati rice had become a viable and sustainable option. He highlighted that basmati not only consumed significantly less water, but also fetched premium prices in both domestic and international markets. Jossan noted that basmati varieties like 1121, 1885, 1509, 1718, and 1401 were in high global demand and Punjab boasted of a strong marketing structure for basmati. "In 2023-24, Punjab produced 26 lakh tonnes of basmati, which increased to 32 lakh tonnes in 2024-25. Currently, due to strong international demand, 1121 paddy is being sold at a rate of Rs 5,000 per quintal. Looking ahead, rising demand suggests that farmers can expect even better prices. The state govt should now focus on spreading awareness among farmers and encouraging them to transition to basmati cultivation with proper guidance, seed quality control, and export support," he said. Last year, the state govt targeted a 40% increase in basmati paddy cultivation. This year, it is targeting 10 lakh hectares — a significant jump from 5.96 lakh hectares in 2023, with the state pushing for Direct Seeding of Rice (DSR) on one lakh hectare of the targeted basmati area. Basmati growers are also eligible to adopt the DSR technique and avail themselves of a financial incentive of Rs 1,500 per acre. Farmers in the basmati belt of Pathankot, Gurdaspur, Amritsar, and Tarn Taran have shown interest in adopting DSR for the PUSA 1509 variety. MSID:: 121694801 413 |
