Indian government’s move to ban Documents against Acceptance (DA) for the Basmati rice is being hailed by the domestic companies for timely payments from overseas buyers. The exporters are mulling to seek similar DA restriction for export of non-basmati from India in the ensuing marketing season. The practise of DA favored the overseas buyers, giving rise to defaults, delayed payments and price manipulations, adversely affecting the domestic companies. The DA allows export of consignment without settlement of payments. Even though DA has been banned for export of basmati since last year, the practise is still prevalent in case of export of non-basmati from India. “The curb on DA in export of basmati has decreased defaults in the trade and also given control over prices to the domestic exporters,” said the Executive Director, All India Rice Exporters Association (AIREA), Mr. Rajen Sundaresan. Therefore the rice exporters lobby is contemplating to seek ban on DA in case of non-basmati from the Indian government, he explained. “The move will boost export and also benefit different stakeholders in the rice trade,” he said.
Mr. Vijay Setia, newly elected President of AIREA explained that the ban on DA had brought benefits to domestic companies as well as farmers who received timely and higher remuneration this time compared to the previous marketing season. “The policy amendment on DA by government has given confidence to exporters who were exploited by buyers once consignments have been delivered,” Mr. Setia said, while adding that the practise of DA allowed buyers to manipulate all companies who were forced to compromise on margins. This year the ban on DA has promoted transaction through Cash against Documents and Letter of Credit. “It has led to better price realization to exporters and higher remunerations to farmers,” he concluded. The export of basmati this season stood around 3.99 million tonnes till March 2017 compared to 4.4-million tonnes in 2015-16. The Indian basmati export has been affected due to less basmati trade to Iran after the gulf nation introduced price regulation of $850 per tonne on basmati import.
Source: The Economics Times (Edited)