Red Sea Crisis: Indian Basmati, Grape Exports Impacted, Says Government Body

The prolonged Red Sea crisis has impacted exports of Indian basmati rice to places like the European Union and Egypt, which use the maritime route, according to Abhishek Dev, chairman of the Agricultural and Processed Food Products Export Development Authority.

A moderation in growth of exports was observed due to the Red Sea crisis, however, exports to India's bigger markets—such as the Gulf countries—aren't seeing much impact, Dev told media on Tuesday in New Delhi. Grapes are another Indian export item, which may see some impact, owing to export demand coming from the EU.

Though there are changes in shipping routes and prices, the demand or order values have not reduced as exports to India's major destinations are not severely impacted.

The long-grain rice variant is one of six Indian Harmonized System codes that are exported from India. Currently, three variants of rice face bans or curbs, restricting their movement outside the country. Broken rice and non-basmati white rice export remains prohibited, whereas parboiled rice faces a 20% export duty.

"While there are controls to the export of rice, we can see that basmati rice, there has been an increase of 19% in value of exports and in quantity, it has been 11%," Dev said.

In terms of non-basmati rice variants, the bigger export category of parboiled rice is likely to see some impact in both value and volume terms due to duty restrictions levied by the government, according to him.

Export growth of parboiled rice saw increase in value during April-November, but not in volume. Government intervention in domestic market is likely showing impact that is reflected as the moderation in export growth, he said.

The government is also mulling introducing newer HS codes for the export of other rice variants and the matter is currently in the discussion stage, according to Rajesh Aggarwal, additional secretary at the Department of Commerce.

The imposition of a curb falls within the sovereign function of the country to ensure domestic availability, but the government is also exploring ways to ensure that not all (rice) variants are impacted by such a move, he said.