India Allows Export of Premium Grade Rice, Easing Ban

By Thomas Kutty Abraham

Sept. 4 (Bloomberg) -- India, the world's biggest producer of rice after China, partly lifted a six-month old ban on exports of some premium quality grain as the country is set to harvest a bumper crop for a second year.

Overseas sales of Pusa-1121, grown in north Indian states, will be permitted starting Oct. 15, the trade ministry said today on its Web site. Details of the shipments must be registered with the ministry, it said.

Rice prices have fallen 25 percent from a record in April as Thailand and Vietnam, the top suppliers, lifted export forecasts this year after farmers increased plantings. Higher global output of the cereal may help countries including India and Egypt scrap restrictions on overseas sales.

``This may be the first step in relaxing the ban totally,'' said Vijay Setia, president of New Delhi-based All India Rice Exporters Association in a telephone interview today.

Rice, the staple food for half the world, reached a record as exporters including Egypt, Vietnam and India halted sales to guarantee domestic supplies. Egypt may resume rice exports this month, Trade Minister Rachid Mohamed Rachid said in July.

High prices spurred sowing of paddy in India by 5 percent to 34.5 million hectares (85 million acres) as of Aug. 28, the farm ministry said. Output may top last year's record of 96.43 million tons, said Setia, echoing a forecast last week by Mangala Rai, director general of the Indian Council of Agricultural Research.

``Production may be at least a 10 percent higher because of the favorable weather,'' Setia said from Karnal in north India.

Basmati Rice

Production of Pusa-1121, sold overseas for more than $2,000 a ton, may reach 1.4 million tons this year, Setia said. Exports of this variety were not allowed as the government did not notify the grain as basmati, an aromatic grain grown in the foothills of the Himalayas.

The export ban, announced in April, excluded Basmati rice.

``Basmati status is a must to promote this high-yielding, less water-guzzling crop to boost production,'' Setia said.

Exports of Pusa-1121 must fetch at least $1,200 a ton, or 48,000 rupees, the trade ministry said today. Shipments will be restricted through ports in Kandla, Kakinada, Kolkata, Mundra, Pipavav and Jawaharlal Nehru Port Trust in Mumbai.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net