GST impact: 5% rate to squeeze margins of basmati rice exporters

Earlier, Basmati rice was subject to VAT in some states and nil duty in others

The profits of branded basmati rice manufacturers and exporters are likely to be squeezed due to the five per cent Goods and Services Tax (GST) effective July 1.

Earlier, the aromatic rice was either subject to value added tax or was tax-free, from state to state.

At present, the impact of a five per cent GST would be nullified due to a sharp increase in prices abroad. Official data shows India's per-unit average realisation from basmati rice exports at $995 a tonne for April-May, compared to $790 a tonne for the corresponding period last year.

"Prices have risen 25 per cent over the