EU price cut may hit basmati exports

The EU has slashed its rice intervention price by nearly half to 150 euros a tonne. As a result, India runs the risk of losing the tariff concessions it enjoys on basmati unless it successfully negotiates for a new trade regime with the European bloc.

The EU is currently negotiating for a new rice import regime under article 28 of the WTO and the new system is expected to be in place by June this year.

"Having painstakingly created a large market for basmati rice in Europe in the last 10 years, we want duty-free imports (into Europe) of brown basmati to continue for the traditional variety", R S Seshadri of United Rriceland said.

He said the 250-euros-a-tonne duty abatement on brown (husked) basmati has already been withdrawn for the hybrid varieties including India's pusa and Pakistani "super" and the concession is now available only for traditional varieties.

"These traditional basmati varieties are unique for their aroma and length. Now that they have already been differentiated fromhybrids, the tariff concession on them must be retained in any new EU import system", he pointed out.

The tariff concession, which was given under the 'headnote 7' of a 1995 agreement, ensured that India's basmati exports grew five-fold since then from 30,000 tonnes to 1.5 lakh tonnes.

Effective from September 1 this year, the EU has cut its intervention or support price to 150 euros a tonne from 290 euros a tonne. This would in effect mean that EU's rice import duty will be zero irrespective of the country of origin and hence the negotiations are on for a new import regime.