(Bloomberg) -- India, the world’s biggest exporter of rice, removed the floor price for basmati shipments to boost the premium variety’s competitiveness in the global market.
The current minimum export price of $950 a ton for issuing registration-cum-allocation certificates for the grain has been scrapped, the country’s Commerce Minister Piyush Goyal said in a post on X on Friday. The decision will help increase basmati rice exports and farmers’ income, he said.
The move is expected to soften global prices of the variety, which is generally grown in the Indian subcontinent and commands a healthy premium because of its longer grain size and unique aroma.
The country continues to curb non-basmati rice exports to keep a lid on local prices. Food inflation climbed 5.66% in August, according to the statistics ministry. However, prices could ease in the coming months as domestic grain reserves are ample and harvesting of rice crops will begin in few weeks.
India started prohibiting or adding taxes on key rice varieties in 2022 in an effort to shore up supplies and quell food inflation ahead of national elections. The moves sent the Asian benchmark price to the highest since 2008 last year and prompted panicked consumers to seek supplies from other nations.
The latest decision comes ahead of elections in October in the northern state of Haryana, a key producer of basmati rice and other agricultural commodities. About two-thirds of India’s 1.4 billion population live in rural areas, making farmers an important voting bloc.
Separately, the nation removed the floor price of $550 a ton for exports of onions with immediate effect, according to a commerce ministry notification.
The government also reduced wheat stockpile limits to prevent hoarding and lower prices of the food grain in the local market, according to a statement from the food ministry.
--With assistance from Abhishek Shanker and Ruchi Bhatia.
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