NOVEMBER 20248BASMATI RICE EXPORTS SURGE 11 PERCENT TO $2.87 BILLION AFTER MEP REMOVALSTEELMAKERS FACE SURPLUS INVENTORY AS A CONSEQUENCE OF STEEL IMPORTSBasmati rice export showed a significant 11 percent increase, amounting to $2.87 billion. The recent elimination of the $950 per tonne minimum export price (MEP) implemented in October 2023 has helped boost the increase in high-value shipments.Government officials cited in the report stated that lifting limitations on rice exports is expected to result in a resurgence of agricultural exports in the latter half of FY25. The government lifted almost all restrictions on the export of basmati and non-basmati rice last month, which included getting rid of the MEP and export taxes.Despite a 17 per cent decrease in exports of non-basmati rice from April to September, totaling $2.25 billion because of restrictions, experts anticipate an increase in export quantities following the elimination of duties and MEP, which will help India regain its top spot in the worldwide rice market. The business-daily quoted Akshay Gupta, business head of bulk exports at KRBL, a major basmati exporter under the `India Gate' brand, stating that India's rice exporters are better positioned to reclaim lost market share due to trade policies. The timing of these eased export measures is particularly advantageous, given the expected 10-15 per cent increase in crop yield compared to last year.In the first half of FY25, India's agricultural sectorand processed food exports dipped slightly by 1 percent to reach $12.13 billion. This decline is credited to a significant 17 percent reduction in exports of non-basmati rice. Indian steelmakers face inventory build-up despite increased domestic steel consumption due to a surge in steel imports, creating challenges for the industry. The steel ministry is actively monitoring the situation as inventory levels of 14 million tonnes (mt) at the end of September show only slight improvement from last year. According to data, steel inventory value since the beginning of 2024-25 is estimated at Rs 89,000 crore.While domestic steel consumption grew by 13.65 percent to 72.82 mt between April and September, a 41 percent increase in imports to 4.7 mt coupled with a 35.9 percent drop in exports to 2.3 mt have exacerbated inventory levels, according to ICRA Limited. This situation is driven by higher Chinese exports and excess monsoon rainfall impacting construction demand.Sector experts also note that domestic steel output rose by 5.1 percent to 70.86 mt in April-September, further contributing to the steel surplus in the market. To address this, import levels must be managed and domestic steel demand revitalized, particularly as weather conditions improve."Higher imports and lower exports have resulted in net import of about 2.4 mt in the first half of the current fiscal. So, while the consumption rate is high, higher net import led to similar inventory levels," said Sumit Jhunjhunwala, sector head of corporate ratings at ICRA Limited. TOP STORIES
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