Basmati rice is considered a “strategic“ agricultural export commodity from India and has consequently remained subject to a wide range of government interventions. Basmati rice is exported from India to many countries, especially to the Gulf and European countries. A steady increase in Bbasmati rice production, availability of buffer stocks, and growing demand for basmati rice in the international market made India a vital rice exporting country of the world. The present study explored the structural changes in basmati rice exports from India from 1991 to 2020. The stability in the importing partners of basmati rice from India was analyzed using first-order Markov chain analysis. The compound annual growth rate for the export quantity of basmati rice varied from 5.74 to 12.65 percent per annum. In contrast, the export value of basmati rice ranged between 4.40 to 21.06 percent per annum during the three selected decades. Further, the basmati rice export value showed higher instability than export quantity. Saudi Arabia, Iran, and the United Arab Emirates served to be the stable importers. In contrast, the United States and the United Kingdom served as the most unstable markets for Indian basmati rice according to the transitional probability matrix. Therefore, to reduce variability in exports of basmati rice, India should maintain long-term stable trading partners further to increase the export earnings.
Increase in production and distinguishing fragrant quality features of basmati rice made India a promising country in the world export market.
Annual compound growth rate varied from 5 to 12 percent in terms of export quantity of basmati rice during the last three decades.
Saudi Arabia, Iran, and the United Arab Emirates served to be the stable importing countries. In contrast, the United States and the United Kingdom served as the most unstable markets for Indian basmati rice export.
India is the second-largest global agricultural producer country globally and ranked eighth in total agricultural exports with a value of 39 billion .S.U.S. dollars during the year 2019. Recently to realize the vision of doubling farmer’s income, the Indian Chamber of Food and Agriculture established Indian Agricultural Export Council further to increase the agricultural exports up to 60 billion .S.U.S. dollars by 2024-25 (
India is the world’s largest rice producer country, next only to China (Najeeburahman, 2017). High yielding varieties, efficient technologies, and various other factors followed under the green revolution in the country resulted in a significant increase in rice production. This helped the country socially and economically in two ways; first, by reducing the starvation in the country and secondly, made the country self-sufficient by reducing dependency on imports from other countries (
Basmati rice is anessential aromatic rice varieties, contributing a considerable share in export earnings of agricultural commodities (
The study was based on secondary data collected from various publications and websites of APEDA, Ministry of Agriculture, Government of India, Director General of Commercial Intelligence and Statistics, Kolkata, and Ministry of Statistics and Programme Implementation, New Delhi. The timeseries data was obtained for the post-liberalization era for 30 years from 1990-91 to 2019-20.
The annual compound growth rates of basmati rice export, in quantity as well as in value terms, were worked out by using the exponential growth function of the form (
The instability in basmati rice export was calculated by using the Coefficient of variation method (
Where, C.V. = coefficient of variation, S.D.* = standard deviation, and AM*= arithmetic mean
The export performance was analyzed based on time-series data from 2011 to 2020 available at APEDA website. The first-order Markov chain analysis was used to study the trade directions of basmati rice export. A similar study was conducted by
Where,
The transitional probability
The diagonal elements of the matrix measure the probability of the export share of a country being retained. Therefore, the examination of diagonal elements of .P.T.P. matrix indicates loyalty towards a particular country’s export of an importing country. The expected export share of a country during the period ‘t’ was obtained by multiplying the actual exports in the previous period (
Exports have played an increasingly important role in transforming the economy and served as a source of absolute gains for the trading partners involved (
Export of Basmati Rice from India (1990-2020) (Value in million .S.U.S. $)
Basmati rice has been occupying an essential place in the agricultural export basket of India. The performance of basmati rice export was entirely satisfactory during post .T.O.W.T.O. period (
Over the last three decades, the exports of Indian basmati rice captured positive growth. 1991-2020 export quantity fluctuated between 2 lakh metric tons to about 44 lakh metric ton 1991-2020 export quantity of basmati rice fluctuated between 2 lakh metric tons to about 44 lakh metric tons. The export earnings from basmati rice were varying between 154 million .S.U.S. dollars in 1991 to ₹ 4330 million .S.U.S. dollars in 2020. Thus, Indian basmati rice had made its unique position worldwide and fetched reasonable export prices in the international market (
Exponential trend was selected as the best fit for both export quantity as well as export value of basmati rice from India (
Exponential trend in export quantity of basmati rice (1991-2020)
Exponential trend in export value of basmati rice (1991-2020)
Exports of basmati rice from India (in quantity and value terms) show exponential growth during the study period. Growth was more prominent between 2007 to 2016. However, the foreign exchange earnings from the export of basmati rice show a sudden downfall between 2014 to 2017, after which it has recovered to the previous level. This was the result of a fall in international prices of Indian basmati rice. The export prices showed a positive correlation with the domestic prices, resulting from which farmers decreased the area under basmati rice cultivation during the upcoming years (
The compound annual growth rate of basmati rice export in quantity and value terms was analyzed for the last three decades (
Compound Annual Growth Rate (CAGR) for Export of Basmati rice from India (percent per annum)
Instability in export of Basmati Rice from India (values in percent)
During Decade III, although it remained the principal exporting commodity and reported an increase in export in absolute terms the CAGR observed of exported basmati rice reduced both in quantity as well in value terms. The fall in CAGR during the third Decade was the result of a higher cost of production as well as marketing and high rate of various taxes imposed on rice exporters such as Purchase Tax on indirect exports, Market fees, Rural Development fund, Administrative charges, etc. which made Indian Basmati rice costlier than its competing nations like Pakistan, Thailand, Vietnam, etc. (
Apart from above India also faced a downfall in exports to its most traditional market i.e., Iran. Recently, Iran declared itself as self-sufficient in basmati rice production. Secondly, there existed positive signs for an increase in Pakistan basmati rice demand by Iran (Report on Basmati Rice, APEDA, 2020).
In order to study the variation in the export trade of basmati rice of India, an attempt was made to analyze the instability in the export of basmati rice over the period 1990-91 to 2019-20 by splitting it into three decades. The instability during Decade II was observed to be highest (more than 30 percent) for quantity as well as the value of basmati rice export, followed by decade I and decade III, respectively (
Basmati rice is a traditionally exported agricultural commodity from India. Indian Basmati rice is known for its fragrant aroma, high quality, and nutrientrich properties (
Destination of Indian Basmati Rice Export (Values in M.T.)
During 2020, Iran accounted for 29.61 percent share in total basmati rice import from India, followed by Saudi Arabia (21.87 percent), U.A.E. (4.68 percent), Yemen (4.56 percent), Kuwait (4.42 percent), U.S.A. (3.33 percent), U.K. (2.60 percent) and other countries (28.90 percent). Iran has served as the primary buyer of Pusa 1121, a new notified variety of basmati rice, since 2008 due to its lowcost vis-à-vis of other basmati varieties (
Trade directions of Indian basmati rice export were analyzed with the help of Markov chain analysis by using time series data from 2000-01 to 201920.
The elements presented in rows of transitional probability (T.P.) matrix provided information regarding probability of retention in a volume of trade and the extent of loss in trade on account of competitive nations. On the other hand, elements of the column represented the probability of gains in trade from other competing nations (
On examination of Transitional probability matrix I (
Transitional probability matrix (TP I) of Indian Basmati Rice Export, 2000-2006
Transitional probability matrix (TP II) of Indian Basmati Rice Export, 2007-2013
Transitional probability matrix (TP III) of Indian Basmati Rice Export, 2014-2020
Transitional probability matrix II (
On perusal of Transitional probability matrix III (
Iran gained 43 percent of its share from countries pooled under other importer category and lost 32 percent of its previous year share to Saudi Arabia, whereas Saudi Arabia gained from U.A.E. (6.27 percent) and Iran (32.47 percent) and lost its previous year share to Kuwait (7.03 percent), U.K. (15.11 percent), U.S.A. (3.55 percent), U.A.E. (15.59 percent) and other importer countries (20.71 percent). Under TP-III also, U.K., U.S.A. along Kuwait reported being highly unstable importers of basmati rice from India.
Projected Exported Quantities of basmati rice from India
On the basis of the transitional probability matrix obtained for the period 2014-20, the projected export quantities of basmati rice were worked out and presented in
The projections showed that Saudi Arabia would likely to remain as leading importer of basmati rice from India. The other importers’ countries like Kuwait, U.K., U.S.A., U.A.E. and Iran would also maintain an important position among top importers of Indian basmati rice. Hence, these countries would serve a significant position in the total export earnings of India from Basmati rice. Similar results have been obtained in the study of
Basmati rice contributes substantially to the national income of our country. Export of basmati rice served to be the primary source of agricultural export earnings. The present study revealed that Indian basmati had a fabulous performance during the study period. It registered favorable growth rates in terms of export quantity as well as value. The compound annual growth rate for the export quantity of basmati rice varied from 5.74 to 12.65 percent per annum. In contrast, the export value of basmati rice ranged between 4.40 to 21.06 percent annum for the three selected decades. This showed that basmati rice is a prospective export commodity from India, increasing s share in total agricultural exports from India. To reduce the instability and to improve the basmati rice export from India, it is imperative to reduce year-on-year variations in exports. Indian basmati rice faced competition from countries like Pakistan, Thailand, and Vietnam. Saudi Arabia, Iran, and United Arab Emirates served to be the stable importers, whereas the United States and the United Kingdom served as the most unstable markets for Indian basmati. Therefore, India should maintain long-term stable trading partners to reduce the instability and increase export earnings. Further, appropriate export promotion strategies must be envisaged to reduce risk and encourage export.