A sudden verdict by Iran to ban rice imports momentarily has upset Indian exporters immensely. Iran’s basmati rice exports from India have been rising for the last few years.

In 2013­14, Iran’s basmati rice imports from India accounted for about 1.45 million tons or 85% of its entire rice imports of about 1.7 million tons.

Iran appeared to cut rice imports from India since February this year. In February, the Middle East nation amended the standard of arsenic in Indian basmati rice from around 150 parts per billion to around 120 ppb.

In September, Iran increased import duty on basmati rice from 22% to 45%. It imposed ban in November citing excess stocks as reason. Yet, experts say some politically driven verdicts are adding in Iran’s standpoint.

It is implicit that Iran’s officials have been demanding to organize a conference between the Iranian President and the Indian Prime Minister but Indian experts were unsuccessful to organize for meeting, as schedule of Indian Prime Minister was very tight. Still, India’s External Affairs Minister had apparently met the Iranian Prime Minister last month in Tajikistan.

Iran is a chief market for India and comprises around 35% of India’s basmati rice exports. The Iranian authorities seemingly ignore exertions by Indian exporters to continue basmati rice imports. Indian basmati rice farmers who are entirely uninformed of such political intentions.

They boosted basmati rice land in the 2014 kharif rice season (June ­ December) almost 40% to about 3.5 million hectares from about 2.5 million hectares previous year.

Rendering to statistics from the Indian Agriculture Ministry, basmati rice yield this year is expected to reach around 8.5 million tons, up around 40% from around 6.25 million tons produced previous year.

Farmers are fetching very low prices due to decreasing export demand. Pusa 1509 is captivating around Rs.2,300­2,700 per quintal and Pusa 1121 is getting around Rs.3, 000 per quintal. Farmers are getting prices as low as Rs.1,500 ­ 2,000 per quintal for other assortments of basmati.

Basmati rice exporters are also insisting the Indian government to support them absorb the damages striking due to drop in basmati rice prices as well as exports by way of renewal of the Rupee Export Credit Interest Subvention Scheme that was stopped after March 31 2014.

In an interest subsidy scheme, the government offers loans to exporters at 7% per annum and offers an interest subsidy of about 2% to exporters who make quick repayment. They are also trying to enhance the interest subsidy under the scheme from the existing 2% to around 5% from Government.