Advisory Creates Uncertainty for Exporters

Many traders are questioning whether BEDF (Basmati Export Development Foundation) has the authority to regulate the Basmati rice industry in India and whether the advisory holds any legal power. APEDA clarified that exporters do not have a legal obligation to follow this advisory.

The advisory, released on September 12, requires that the rice in any "packet or bag" must match the variety listed on the label. If exporters specify a Basmati rice variety on the packaging, they must ensure that the rice inside reflects the same variety, as mandated by the Seed Act of 1966.

Key Concerns from the Trade

One part of the advisory has unsettled traders. It states, “Writing the name of the Basmati rice variety is not mandatory on the label, and it may be adhered to as per the requirement of the buyer or importing country.” The advisory also emphasizes the need to maintain traceability from the mandi (agricultural terminal or market) or farm level. However, traders argue that the advisory does not explain how to ensure traceability or conduct proper testing.

Tarun Bajaj, the Director of BEDF, clarified that the advisory simply asks exporters to avoid false declarations. “It’s not a binding rule,” Bajaj said. "If an exporter claims to export the 1121 variety, they should ensure they don’t pack a different one."

Industry Concerns Over Seed and Labeling Rules

One trade source pointed out that the advisory contradicts existing Seed Laws. The Seed Law requires that 98% of the seeds must match the declared variety. In contrast, the Basmati Rice (Export) Grading and Marketing Rules of 2003 allow some mixing of different rice grades.

• The Basmati Rice (Quality Control and Inspection) Rules of 2003, based on an older 1939 rule, permit blending of up to 5% special grade rice,
• 8% Grade A,
• or 15% B-grade rice.

Traders noted that the first BEDF advisory addressed both packaging and documentation, but the current one focuses only on packaging. Furthermore, the mention of rice variety has been dropped.

Labelling Confusion

The advisory allows exporters to follow the importing country’s labeling requirements, which worries traders. They fear that this flexibility could encourage the mixing of other rice varieties with Basmati. For instance, an importer could blend 50% non-basmati rice with Basmati, potentially harming the authenticity of Indian Basmati rice.

One trade source added, “In a Geographical Indication (GI) product like Basmati, the owner controls the label. GI is all about labeling. Giving importers control could damage the country’s reputation.”

Trade Requests for Clarity

Traders are pushing for clearer rules regarding price variations and label descriptions. They fear that unclear labels lacking terms like “authentic” or “traditional” might confuse buyers and cause price discrepancies.

APEDA officials believe that traders are misinterpreting the advisory. According to trade sources, the variety of Basmati directly impacts price transparency. For example, in the European Union (EU), rice varieties must be declared to qualify for duty concessions.

The advisory also states that traceability should be maintained from the mandi or farm level. However, while exporters and millers may have systems for this, many mandi agents lack the necessary records to track rice back to the farms. Traders believe this creates a weak link in the traceability chain.

Impact on Madhya Pradesh and Other Regions

Traders fear that the advisory could hurt regions like Madhya Pradesh, Eastern Uttar Pradesh, and parts of Rajasthan like Kota and Bundi. Many importing countries do not recognize these areas as traditional Basmati-growing regions, which could limit their export potential.

Scrapping of Minimum Export Price (MEP)

Another concern raised by traders is how authorities will prevent non-basmati rice from being exported as Basmati after the Commerce Ministry removed the USD 950 per tonne Minimum Export Price (MEP). Traders argue that the MEP originally aimed to prevent such issues. APEDA has been tasked with closely monitoring export contracts to avoid unrealistic Basmati pricing.

Conclusion: Industry Seeks Clarity on Basmati Export Rules

The recent advisory from BEDF has raised several concerns among traders, particularly around labeling, traceability, and the potential impact on non-traditional Basmati-growing regions. While APEDA insists that the advisory is not mandatory, exporters remain cautious about how these changes could affect their businesses and the reputation of Indian Basmati rice.

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