Egypt Looking To Buy Indian Rice Through Rupee Route

Egypt Looking To Buy Indian Rice Through Rupee Route

India is the world’s largest rice exporter and commands 40% of the global rice trade. 

Egypt’s Rice Imports 

Considering its difficulties making payments in dollars, Egypt is looking to import at least 1.5 lakh tonnes (lt) of rice from India via the rupee (INR) trade route, according to trade sources. 

According to information from the Agricultural and Processed Food Products Export Development Authority, Egypt imported 76,858 tonnes of rice from April through January of this fiscal year. Since importing 1.3 lt of rice during the 2018–19 fiscal year, it is at its highest level. 

As per an anonymous source, “Egypt recently purchased two ship loads of rice by paying in dollars. However, it had to face tremendous difficulties in paying the money.” He further mentioned that Cairo currently requires 6 more ship loads of rice which could total over 1.5 lt and wishes to make payments in INR. 

Payments in INR 

The switch in primary currency is being made at a time when at least 19 countries, including the United Arab Emirates, Russia, Singapore, Germany, New Zealand, and the UK, have chosen to trade in INR rather than the dollar as the main currency for cross-border exchange. 

When contacted, BV Krishna Rao, the President of The Rice Exporters Association (TREA), said, exporters would be willing to take orders in rupee terms given that the Central Government offers some concessions. This is due to the 0.5% to 1% forward premium that exporters receive when trading in dollars. He also said that, “There are quite a few ways in which the Government could compensate the traders for this.” However, Rao argued that in the long run, the Centre should encourage rupee export transactions. 

Decisions To Be Made

A trade analyst from New Delhi said, “The Centre should allow rice trade in Indian rupee to encourage Egypt which has previously had traditional commercial relations with India.” 

North African nations as a whole, including Egypt, are struggling with their currencies, particularly in relation to the dollar. According to trade sources, Egypt has been taking a number of steps to address the dollar shortage. 

Cairo has started conducting business with Russia in local currencies and intends to include China and India as well. By engaging in such trading with Russia, China, and India, it anticipates saving at least $1.5 billion. 

Rajesh Paharia Jain, a trader based in New Delhi, claims that India can consider bartering with Egypt by exporting rice and importing rock phosphate. “We are a net importer of rock phosphate and Egypt has ample quantities of the commodity. It can help meet our fertilizer requirements.” 

The trade analyst said exporters must think of cutting costs and look at process innovation in the short-term in the event of losing the forward premium they get while trading in dollars. 

Price Of Rice In India, Thailand And Vietnam 

On the other hand, Egypt cannot attain a more competitive rice exporter than India. According to the Thai Rice Exporters Association, Vietnam and Thailand have respectively quoted prices of $448–52 and $477 for their 5% broken white rice, while India has set its price at $432–36 per tonne. The price of the rice in Pakistan is $453-57. 

Indian prices for 25% broken white rice are $417-21, while Vietnamese and Pakistani prices are $428-32. Thailand sells it at $468. 

India’s Rice Trade 

The Ministry of Agriculture has estimated rice production for the current crop year through June at a record 130.84 million tonnes, up from 129.47 million tonnes in the previous crop year.

Despite the government charging a 20% duty on shipments of white and brown rice and forbidding shipments of fully broken rice, exports of rice have done well. 

The demand from Egypt, which is not one of India’s top customers, comes at a time when India’s rice exports are increasing in response to demand from South-East Asia and Gulf nations. 

Non-basmati exports increased to 14.56 mt valued at $5.16 billion between April and January of the current fiscal year as opposed to 14.01 mt valued at $5 billion during the same time in the previous year. 

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