Zania-Editor
India’s basmati rice industry is expected to see revenue growth slow to 4% this fiscal year, reaching nearly Rs 70,000 crore. This is a decrease from the impressive 20% growth last year, according to a report by Crisil Ratings.
Despite this slowdown, revenue is still projected to hit an all-time high due to government support, including the recent removal of the minimum export price (MEP) for basmati rice. This change is expected to boost both domestic and international demand.
The MEP of $1,200 per tonne was initially imposed in August 2023 to address rising domestic rice prices, but it was lowered to $950 in October after discussions with industry stakeholders. Now, exporters can sell basmati rice even at prices below the MEP, allowing India to tap into lower-priced markets and increase export volumes.
Exports, which make up 72% of basmati rice sales, are projected to grow by 3-4% this year as countries seek stable food supplies amid global uncertainties. Domestic sales are expected to rise by 6%, driven by demand from hotels and restaurants, lower prices, and increasing household incomes.
Basmati companies are also expected to boost their processing and packaging capacities by 10% to meet rising demand. Volume growth is anticipated to reach 9 million tonnes, offsetting a nearly 5% drop in prices. Increased paddy output and lower procurement costs will help replenish stocks, which have fallen to a five-year low.
Overall, the industry is on track for a strong fiscal year, with inventory levels expected to stabilize to normal ranges by the end of the year.
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