According to government and industry authorities, India’s basmati rice exports fell by a fifth from a year before to the lowest level in four years in 2021, as key importer Iran cut purchases as its rupee reserves dwindled.
According to government data, basmati rice exports in 2021 plummeted 20% from the previous year to 4 million tonnes, the lowest level since 2017.
The report showed that shipments to Iran, India’s largest consumer of basmati rice, fell 26% year on year to 834,458 tonnes.
“After its rupee deposits with Indian banks drained last year, Iran was not active in the market for a few months,” said a Mumbai-based trader with a multinational trading business.
Iran had previously agreed to sell oil to India in exchange for rupees, which it used to import essential products such as agricultural commodities, but after a US sanctions waiver ended in May 2019, New Delhi ceased buying Tehran’s oil.
Tehran continued to buy commodities from India with its rupees, but no crude sales were made, causing Iran’s rupee reserves to plummet.
Exports slowed in the middle of 2021, but buying from Iran, Saudi Arabia, and other key purchasers has picked up in the last two or three months, according to Vijay Setia, former president of the All India Rice Exporters Association (AIREA).
Non-basmati rice is primarily exported to African countries, while superior basmati rice is primarily exported to the Middle East. India is the world’s largest rice exporter.
Bangladesh, China, and Vietnam upped their purchases, resulting in a roughly 46 percent rise in overall rice exports in 2021 over the previous year to a record 21.42 million tonnes.
According to Setia, basmati rice output in 2021 would be down roughly 15% from a year ago due to decreased area and unseasonably wet harvesting season.
“Export prices of basmati rice have increased by 20% due to lesser supply, but demand for February and March shipments remains strong,” Setia said.