Pakistan imports rice from India for the first time

In the post MFN regime, Pakistan for the first time has started importing rice from India. In an interesting development, Pakistan, which is already a rice exporting country, has imported basmati rice from India soon after the liberalisation of trade between the two South Asian neighbours.
The rice exporters and farmers are very concerned about the development, as the cheaper products from the neighbouring country would badly hit the local production, causing huge losses to both exporters and farmers. According to sources, Pakistani traders have given the first import order for at least 2,500 tonnes rice, while almost 100 tonnes have reached the markets in the Punjab area, sources told Profit. It was feared that the traders would further place orders for imports as the commodity in Indian market was available at cheaper rates than Vietnam, Thailand and other countries. The development took place soon after the announcement of 636 negative items prepared by the Ministry of Commerce, while replacing the already existing positive list for trade with India. Rice, interestingly, has not been included in the 16 items short listed by the ministry, as part of the negative list of imports from New Delhi. Though the exporters of rice in the country could not confirm the arrival of rice from the neighbouring country through Wagha border, the commodity, sources claimed was imported via the land route from Muzaffarabad. “This was a major development in the history as the Indian commodity was coming to Pakistan, despite of already having a huge stock in the country,” sources said adding that this was because of the major difference in price as India has reduced the bench mark price of rice drastically; affecting not only Pakistan, but also the global market.
Sources in Rice Exporters Association of Pakistan (REAP) said though the rumour was there that the traders have started importing rice from the neighbouring country, but the association was yet to have confirmed reports of the development. “Though the development would badly hit the exporters and growers, the imports of cheaper rice especially basmati from outside the border would discourage the growers in the country,” they said adding as the exporters could re-export the imported items, the major losses would be borne by the growers.
Besides that the development was also because of the miscalculation of the high ups in REAP which was expecting that the country’s products especially basmati would be exported to India, to be re-exported from Delhi to other markets, sources claimed. But, the huge differences in price, along with the diversified qualities of rice in India, like original basmati, duplicate basmati and others available at comparatively cheaper rates. It is worth mentioning here that despite of the bumper crop in the country this year, the record decline in export price of non-basmati rice from India was already creating tough competition for the country’s products in the international market. Beside the decline in price, the Indian commodity, over four per cent devaluation of its currency against the dollar in the first six months of current fiscal year has also created problems for Pakistani rice. The rice export was expected to be enhanced after the flood in Thailand, the biggest exporter of rice; the ever declining export price of rice in Delhi was also creating acute uncertainty in the international market. The Indian government had reduced the minimum export price of non-basmati rice after exports failed to pick up. The government had allowed limited exports of non-basmati rice after a bumper crop in 2010-11. Earlier, India had banned exports of rice, except the costlier basmati variety, to beef up supplies in the domestic market and cool down soaring prices in April 2008. Presently, the increased domestic production and lower export of basmati, last year had resulted in abundant availability in the Indian domestic market. These factors brought down prices of this elite variety.