NEW DELHI, Sept 17: Indian basmati rice exports are expected to fall sharply as an export tax makes the grain more costly while its rival, Pakistan, gains from a steep fall in its currency, a top exporter said on Wednesday.

R.S. Seshadri, director of Tilda Riceland, India’s largest basmati rice exporter, said the price gap between premium varieties from the two countries had risen to about $500 a ton. “With a gap of $500 a ton, there is no chance that a foreign buyer will look at India. This gap has been existing for the last two months,” he told Reuters.

In neighbouring Pakistan, where rice accounts for about 8 per cent of the country’s exports, traders said shipments were rising. “Rice exports have become attractive due to the rupee’s devaluation, and we have seen exports going up,” said Abdul Baseer, vice-chairman Rice Exporters’ Association of Pakistan.

Pakistan’s total rice output is expected to rise at least 10 per cent to more than 6 million tons in the 2008-09 fiscal year on a larger planted area, officials and growers say.

But exporters estimate rice output at 7 million tons and say exports could exceed 4 million tons.

A Pakistani exporter, who did not want to be named, said annual basmati exports from the country might rise to 1.2 million tons next year from 800,000 tons.

“Pakistan’s minimum export price is lower on basmati rice than India’s and along with the devaluation exports are going to be more attractive,” he said.

EXPORT CURBS: Seshadri said new export contracts were usually signed in October, just ahead of the harvest of the new crop.

India’s basmati rice is quoted at about $1,400 a ton for varieties usually shipped to the Middle East. The government slapped a tax of about $200 per ton on overseas sales of its aromatic basmati variety of rice earlier this year.

It also allowed exports of the premium grades only at a floor price of $1,200 per ton.

“The $200 tax is just the last straw and it is not at all helping. Neither does it go to the farmer nor to the trader,” Seshadri said. “A clarification on this is needed as quickly as possible. The new rice crop is going to come in a month or two.” He added the government would be under pressure to roll back the export tax by October or November if Indian exporters lost market share, but by then farmers would have already sold the crop at a lower price.

India banned exports of non-basmati rice earlier this year to ensure domestic supplies, but this month allowed shipments of the premium non-basmati variety, Pusa-1121.—Reuters