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INTRODUCTION

Export marketing means exporting goods to other countries of the world. It involves lengthy

procedure and formalities. In export marketing, goods are sent abroad as per the procedures

framed by the exporting country as well as by the importing country. Export 2marketing is

more complicated to domestic marketing due to international restrictions, global competition,

lengthy procedures and formalities and so on. Moreover, when a business crossed the borders

of a nation, it becomes infinitely more complex. Along with this, export marketing offers

ample opportunities for earning huge profits and valuable foreign exchange.Export marketing

has wider economic significance as it offers various advantages to the national economy. It

promotes economic / business / industrial development, to earn foreign exchange and ensures

optimum utilization of available resources. Every country takes various policy initiatives for

promoting exports and for meaningful participation in global marketing. Global business is a

reality and every country has to participate in it for mutual benefits. Every country has to

open up its markets to other countries and also try to enter in the markets of other countries in

the best possible manner. This is a normal rule which every country has to follow under the

present global marketing environment. In the absence of such participation in global

marketing, the process of economic development of the country comes in danger.

FEATURES OF EXPORT MARKETING

The main important features of export marketing are as follows.

1) Systematic Process

Export marketing is a systematic process of developing and distributing goods and services in

overseas markets. The export marketing manager needs to undertake various marketing

activities, such as marketing research, product design, branding, packaging, pricing,

promotion etc. To undertake the various marketing activities, the export marketing manager

should collect the right information from the right source; analyze it properly and then take

systematic export marketing decisions.3

2) Large Scale Operations

Normally, export marketing is undertaken on a large scale.Emphasis is placed on large orders

in order to obtain economies in large sole production and distribution of goods. The

economies of large scale help the exporter to quote competitive prices in the overseas

markets. Exporting goods in small quantities is costly due to heavy transport cost and other

formalities.

3) Dominance of Multinational Corporations

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Export marketing is dominated by MNCs, from USA, Europe and Japan. They are in a

position to develop world wide contacts through their network and conduct business

operations efficiently and economically. They produce quality goods at low cost and also on

massive scale.

4) Customer Focus

The focus of export marketing is on the customer. The exporter needs to identify customers

needs and wants and accordingly design and develop products to generate and enhance

customer satisfaction. The focus on customer will not only bring in higher sales in the

overseas markets, but it will also improve andenhance goodwill of the firm.

5) Trade barriers

Export marketing is not free like internal marketing. There are various trade barriers because

of the protective policies of different countries. Tariff and non-tariff barriers are used bycountries for restricting import. The export marketing manager must have a good knowledge

of trade barriers imposed by importing countries.

6) Trading Blocs

Export trade is also affected by trading blocs, certain nations form trading bloc for their

mutual benefit and economic development. The non-members face problems in trading with

the members of a trading bloc due to common external barriers. Indian exporters should have

a good knowledge of important trading blocs such as NAFTA, European Union and ASEAN.

7) Three

faced competition

In export markets, exporters have to face three-faced competition, i.e., competition from the

three anglesfrom the other suppliers of the exporters country, from the local producers of

importing country and from the exporters of competing nations.

8) Documentation

Export marketing is subject to various documentation formalities. Exporters require various

documents to submit them to 4various authorities such as customs, port trust etc. The

documents includeShipping Bill, Consular Invoice, Certificate of Origin etc.

9) Foreign exchange regulations

Export trade is subject to foreign exchange regulations imposed by different countries. These

regulations relate to payments and collection of export proceeds. Such restrictions affect free

movement of goods among the countries of the world.

10) Marketingmix

Export marketing requires the right marketing mix for the target markets, i.e. exporting the

right product, at the right price, at the right place and with the right promotion. The exporter

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can adopt different marketingmixes for different export markets, so as to maximize exports

and earn higher returns.

11) International marketing Research

Export marketing requires the support of marketing research in the form of market survey,

product survey, product research and development as it is highly competitive. Various

challenges, identification of needs and wants of foreign buyer in export marketing can be

dealt with through international marketing research.

12) Spreading of Risks

Export marketing helps to spread risks of business. Normally export firms sell in a number ofoverseas markets. If they are affected by risks (losses) in one market, they may be able to

spread business risks due to good return from some other markets.

13) Reputation

Export marketing brings name and goodwill to the export firm. Also, the country of its origin

the gets reputation. The reputation enables the export firm to command good sales in the

domestic market as well as export market

IMPORTANCE OF EXPORT MARKETING

Exports are important for all countries whether developed or underdeveloped. The need /

importance / advantages of export marketing can be explained from the viewpoint of a

country and that of business organization.

Need / Importance / Advantages of Export Marketing at the National Level:

1) Earning foreign exchange

Exports bring valuable foreign exchange to the exporting country, which is mainly required

to pay for import of capital goods, 5raw materials, spares and components as well asimporting advance technical knowledge.

2) International Relations

Almost all countries of the world want to prosper in a peaceful environment. One way to

maintain political and cultural ties with other countries is through international trade.

3) Balance of payment

Large scale exports solve balance of payments problem and enable countries to have

favourable balance of payment position. The deficit in the balance of trade and balance ofpayments can be removed through large-scale exports.

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4) Reputation in the world

A country which is foremost in the field of exports, commands a lot of respect, goodwill and

reputation from other countries. For example, Japan commands international reputation due

to its high quality products in the export markets.

5) Employment Opportunities

Export trade calls for more production. More production opens the doors for more

employment. Opportunities, not only in export sector but also in allied sector like banking,

insurance etc.

6) Promoting economic development

Exports are needed for promoting economic and industrial development. The business grows

rapidly if it has access to international markets. Large-sole exports bring rapid economic

development of a nation.

7) Optimum Utilization of Resources

There can be optimum use of resources. For example, the supply of oil and petroleum

products in Gulf countries is in excess of home demand. So the excess production is

exported, thereby making optimum use of available resources.

8) Spread Effect

Because of the export industry, other sectors also expand such as banking, transport,

insurance etc. and at the same time number of ancillary industries comes into existence to

suppo0rt the export sector.

9) Higher standard of Living

Export trade calls for more productions, which in turn increase employment opportunities.

More employment means more purchasing power, as a result of which people can enjoy new

and better goods, which in turn improves standard of living of the people.6

Need / Importance / Advantages of export marketing at

Business / Firm / Enterprise Level

1) Reputation

An organization which undertakes exports can bring fame to its name not only in the export

markets, but also in the home market. For example, firms like Phillips, HLL, Glaxo, Sony,

coca cola, Pepsi, enjoy international reputation.

2) Optimum Production

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A company can export its excess production after meeting domestic demand. Thus, the

production can be carried on up to the optimum production capacity. This will result in

economies of large scale production.

3) Spreading of Risk

A firm engaged in domestic as well as export marketing can spread its marketing risk in two

parts. The loss is one part (i.e. in one area of marketing) can be compensated by the profit

earned in the other part / area.

4) Export obligation

Some export organization are given certain concessions and facilities only when they acceptcertain export obligations Largescale exports are needed to honour such export obligations in

India, units operating in the SEZs / FTZs are expected to honour such export obligations

against special concessions offered to them.

5) Improvement in organizational efficiency

Research, training and the experience in dealing with foreign markets, enable the exporters to

improve the overall organizational efficiency.

6) Improvement in product standards

An export firm has to maintain and improve standards in quality in order to meet

international standards. As a result, the consumers in the home market as well as in the

international market can enjoy better quality of goods.

7) Liberal Imports

Organizations exporting on a large-scale collect more foreign exchange which can be utilized

for liberal import of new technology, machinery and components. This raises the competitive

capacity of export organizations.

8) Financial and non-Financial benefits

In India, exporters can avail of a number of facilities from the government. For example,

exporters can get DBK, tax exemption

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RICE EXPORTS

Worldwide, India stands first in rice area and second in rice production, after China. It

contributes 21.5 percent of global rice production. Within the country, riceoccupiesone-

quarter of the total cropped area, contributes about 40 to 43 percent of total food grain

production and continues to play a vital role in the national food

andlivelihood security system. However, India did not become a major rice exportingcountry

for a long time. Its share in world rice trade, mainly in the form of small-volume exports of

highly prized basmati rice, was insignificant (5 percent). It was not until themid-1980s that

the quantum of export started to grow, from110000 tonnes in 1978-79to 890613 tonnes in

1994-95 and to a record 5.5 million tonnes in 1995-96,secondonly to Thailand (at 5.9 million

tonnes).Rice is one of theimportantcereal food cropsof India. Ricecontributes about 43% of to

tal foodgrain production and 46% of total cereal production in the country. It continues

to play vital role in the national exports. The percentage share of rice in total national export

was 4.5% during 2005-06. The percentage share of agriculture

export in total national export was18.25%, whereas the percentage share

of rice export in total agriculture export was 24.62% during 2005-06. Thus, rice export

contributes nearly35% of total agriculture export from the country. Among the exporting

countries, Thailand, Vietnam, India and Pakistan are the major countries exporting rice in

sizeable quantity. India is one of the richest countries in the world in terms of possessing

tremendous diversity in rice varieties. There are different varieties of rice-depending on the

weather, soil, structure, characteristics and purposes. Rice is grown under a damp warm

climate. A temperature range of 20C to 37.7C (68 F to 100 F) is required for the optimum

growth of rice. Rice being a semi-aquatic crop grows best under submerged, waterlogged

conditions. Rice is able to tolerate aide range of soil reactions, but has a preference of acidic

soils. Rice cultivationisfound in all the states of India, but West Bengal, Uttar Pradesh,

Madhya Pradesh, Punjab, Orissa and Bihar are themajorrice producing states. About 600improved varieties of India rice have been released for cultivation since 1965.

Throughout history ricehas been one of man's most important foods. Today, this uniquegrain

helps sustain two- thirds of the world's population. Archeological evidence suggeststhat rice

has been feeding mankind for more than 5,000 years. Today, agriculture is the backbone of

Indias economy, providing direct employment to about 70% of working people in the

country. It forms the basis of many premier industries of India, includingthe textile, jute, and

sugar industries. Agriculture contributes about 31% to GDP; about25% of India's exports are

agricultural products.

RiceProduction area

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The major rice growing area in India are West Bengal, Uttar Pradesh, Madhya

Pradesh,Orissa, Bihar, Andhra Pradesh, Assam, Tamil Nadu, Punjab, Maharashtra,

Kannataka,Haryana, Gujarat, Kerala, Jammu- Kashmir, Tripura, Meghalaya, Manipur,

Rajasthan, Nagaland, Arunanchal Pradesh, Himachal Pradesh, Mirozam, Goa, Pondicherry,

Sikkim,A & N Island and D & N Haveli.

Growth promotional activities

Rice is the agriculture is the backbone of Indias economy, providing direct employment to

about 70% of working people in the country. It forms the basis of many premier industries of

India, including the textile, jute, and sugar industries. Agriculture contributes about 31% to

GDP; about 25% of India's exports are agricultural products. Through a combination of

increasing the area under cultivation and increasing cropping intensity today India is self

sufficient in rice. Adoption of modern varieties (MVs) rice production exceeded 100 million t

annually since 1988. India regularly exports highqualitybasmati rice (aromatic).In India

alone, basmati rice; on basmati rice exports are valued at (US) $800 million per annum. Over

80% of Basmati rice grown in India is produced for export.

Types of Rice There are primarily four distinct types of rice: India accounts for more than 75

percent of global trade, Japonica rice that accounts for around 12 percent of global rice trade,

Basmati rice accounts for around 10 percent of global trade and Glutinous rice accounts for

most of the remainder.

RICE EXPORT SCENARIO

India is one of the important countries in the world in export of rice. India's exports areexpected to go up further during current financial year. Hence, Indian rice exports are set to

reach second place in the world markets after Thailand edging out Vietnam in the process as

per the report of the Food and Agricultural Organisation.

Basmati Rice Background

Rice export from India constitutes the major share of Basmati rice. Nearly two-third of

Basmati rice produced in India is exported. Basmati rice is the leading aromatic fine quality

rice of the world trade and it fetches good export price in the international markets. Infect,

Basmati rice is a gift from "Mother Nature" to the Indian sub-continent and grows in theIndo-Agnatic plains only. The meaning of Basmati can be derived from "bas" which means

aroma and "mati"meaning sense. Thus the word Basmati implies 'ingrained aroma'. So it is

the aroma that gives basmati its novel characteristics unmatched by any other rice grain

anywhere else in the world. Many scented varieties of rice have been cultivated in the Indian

sub-continent from time immemorial but basmati distinguishes itself from all other aromatic

rice due to its unique aromatic characteristics coupled with silky texture of its long grain.

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RICE PRODUCTION IN THE ASIA-PACIFIC REGION: ISSUES AND

PERSPECTIVES

Rice is the staple food of Asia and part of the Pacific. Over 90 percent of the worlds rice is

produced and consumed in the Asia-Pacific Region. With growing prosperity and

urbanization, per capita rice consumption has started declining in the middle and high-income

Asian countries like the Republic of Korea and Japan. But, nearly a fourth of the Asian

population is still poor and has considerable unmet demand for rice. It is in these countries

that rice consumption will grow faster. The Asian population is growing at 1.8 percent peryear at present, and population may not stabilize before the middle of the next century. A

population projection made for the year 2025 shows an average increase of 51 percent, and in

certain cases up to 87 percent over the base year 1995. So far the annual growth rate for rice

consumption in the Asia-Pacific Region over a period of 45 years (1950 to 1995) has kept

pace with the demand, more through yield increase rather than area expansion. Improved

varieties have made a significant impact (Khush, 1995) in an ever increasing order during this

period. The world rice supply has more than doubled from 261 million tonnes in 1950 (with

Asian production of 240 million tonnes) to 573 million tonnes in 1997 (including the regions

production of 524 million tonnes). Production has more than doubled overtaking the

population growth of nearly 1.6 times in Asia. A measure of this success is reflected by the

fall in the price of rice in the world markets.

The Asia-Pacific Region, where more than 56 percent of the worlds population live, adds 51

million more rice consumers annually. As a result of this the thin line of rice self-sufficiency

experienced by many countries is disappearing fast. How the current 524 million tonnes of

rice produced annually will be increased to 700 million tonnes by the year 2025 using less

land, less people, less water and fewer pesticides, is a big question. The task of increasing

substantially the current level of production will face additional difficulties as the avenues for

putting more area under modern varieties and using more fertilizers for closing the yield gap,

bringing in additional area under rice or under irrigation are becoming limited. The irrigated

rice area currently occupies about 56 percent of the total area and contributes 76 percent of

the total production. It would be hard to increase this area due to the problems of soil salinity,

high cost of development, water scarcity, alternative and competing uses of water, and

environmental concerns. Thus, increased productivity on a time scale has to make the major

contribution across ecosystems by using more advanced technologies.

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CURRENT RICE SITUATION

Production-Consumption Scenario

Rice is the crop of the Asia-Pacific Region. The projected demand by the year 2025 is mind

boggling (Hossain, 1995), as in major Asian countries rice consumption will increase faster

than the population growth. In summary, in Asia, the rice consumption by the year 2025, over

the base year 1995, will increase by more than 51 percent (Table 1). Another significant

change will be the development of many mega cities of the size of 10-15 million people over

and above the general urbanization of the populace. Thus, the number of consumers will

grow and the number of producers will be reduced dramatically. The current demand of 524

million tonnes is expected to increase to over 700 million tonnes. Rice will continue to supply

50-80 percent of the daily calories, and thus the average growth rate in production has to keep

pace with the growth rate of the population.

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ORIGIN AND HISTORY OF RICE IN INDIA

India is an important centre of rice cultivation. The rice harvesting area in India is the world's

largest. The two major rice varieties grown worldwide today are Oryzasativa indica and

Oryza saliva japonica. According to research studies, they owe their origins to two

independent events of domestication thousands of years ago. Historians believe that while the

indicia variety of rice was first domesticated

Inthe area covering the foothills of the Eastern Himalayas (i.e. north-eastern India), stretching

through Burma, Thailand, Laos, Vietnam and Southern China, the japonica variety wasdomesticated from wild rice in southern China which was introduced to India before the time

of the Greeks. The earliest remains of cultivated rice in the sub-continent have been found in

the north and west and date from around2000 BC. Perennial wild races still grow in Assam

and Nepal. It seems to have appeared around1400 Bin southern India after its domestication

in the northern plains. It then spread to all the fertile alluvial plains watered by rivers.

Cultivation and cooking methods are thought to have spread to the west rapidly and by

medieval times, southern Europe saw the introduction of rice as hearty grain. Some says that

the word rice is derived from the Tamil

wordArisi.Riceis first mentioned in theYajur Veda (c. 1500-800 BC)and then isfrequentlyreferred to in Sanskrit texts. In India there is a saying that grains of rice should be like two

brothers, close but not stuck together. Rice is often directly associated with prosperity and

fertility; hence there is the custom of throwing rice at newlyweds. In India, rice is always

the first food offered to the babies when they start eating solids or to husband by his new

bride, to ensure they will have children.

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PRODUCTION OF RICE IN INDIA

From a nation dependent on food imports to feed its population, India today itself-sufficient

in grain production and also has a substantial reserve. The progress made by agriculture in the

last four decades has been one of the biggest success stories of liberal India. Agriculture and

allied activities constitute the single largest contributor tithe Gross Domestic Product,

almost33%of it. Agriculture is the means of livelihood of about two-thirds of the work force

in the country. The demand for rice in India is projected at 128 million tonnes for the year

2012and will require a production level of 3,000 kg/hectare significantly greater than

the present average yield of 1,930 kg/hectare. Government of India is targeting toachieve production of 129 million tonnes of rice by 2011-12 with the growth rate of 3.7%

along with other food grains. The production of rice in India has shown an increasing trend

which is evident from the Table given below:

PRODUCTION CONSUMPTION

CLASSIFICATION OF RICE

India is one of the important countries in the world in export of rice. Indias exports are

expected to go up further during current financial year. Hence, Indian rice exports are set toreach second place in the world markets after Thailand edging out Vietnam in the process as

per the report of the Food and Agricultural Organisation. Indian rice is classified into three

types:

A. BASMATI RICE

Rice export from India constitutes the major share of Basmati rice. Nearly two-third of

Basmati rice produced in India is exported. Basmati rice is the leading aromatic fine

quality rice of the world trade and it fetches good export price in the international markets. In

fact, Basmati rice is a gift from "Mother Nature" to the Indian sub-continent and grows in

theIndo-Gangatic plains only.

The meaning of Basmati can be derived from"bas"which means aroma and"mati"meaning

sense. Thus the word Basmati implies ingrainedaroma'. So it is the aroma that gives basmati

its novel characteristics unmatched by any other rice grain anywhere else in the world. Many

scented varieties of rice have been cultivated in the Indian sub- continent from time

immemorial but basmati distinguishes itself from all other aromatic rice due to its unique

aromatic characteristics coupled with silky texture of its long grain. Now, it is still considered

dream of the masses" and "charmoftheclasses".Golden parboiled Raw Basmati

Silky raw basmati rice Gulf region remains the major markets for Indian basmati rice andinside Gulf, Saudi Arabia accounts for the major chunk of basmati imports from India.

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Pakistan is the sole competitor for India in the international market for basmati rice. During

2005-06, 2006-07 and 2007-08, total quantities of basmati rice exports from India were

5.98lakh million tonnes, 6.38 laky million tonnes and 8.52 laky million tonnes in which

the percentage share of Asia was 85.69%, 82.12% and 73.38% respectively.

The export to North America has also increased in the same order from 1.39%during 1998-99

to 5.28% during 2000-01. However the export to other countries remains constant with slight

fluctuation from year to year. India's major markets for basmati rice exports have been

Saudi Arabia, Australia, Austria, Belgium, Bahrain, France,Germany, U.K., Denmark,

U.S.A., Canada, Belgium, Kuwait, Italy, Oman, Yemen, Netherlands, Jordan, Indonesia,etc.

In fact, Saudi Arabia traditionally has been the largest market for Indian basmati rice.

B. NON-BASMATI RICE

Major destinations for India's non-basmati rice exports areBangladesh,Australia, Bahrain,

Ethiopia, Djibouti, France, Germany, U.K., Hong Kong, Korea,Sri-Lanka, Maldives,

Mauritius, Malaysia, Nigeria, Ivory coast, Indonesia, Nepal,

Oman, Qatar, Russia, South Africa, Saudi Arabia, Somalia, Singapore, U.A.E.Y.A.R., etc.

Competing countries in the international markets for India for the exports onion-basmati rice

are Thailand, Vietnam, Burma, China, U.S.A. and Pakistan. Major quantity of non-basmati

rice is exported to Asia continent. During 2004-05, 2005-06, 2006-07 and 2007-08, a total

quantity of 9.59 lakhmillion tonnes, 9.28 laky million tonnes, 28.75 laky million tonnes and

7.08 laky million tonnes were exported to Asia continent which were 48.20%, 51.66%,65.86% and56.28% of total export of non-basmati rice from India to Asia, respectively. After

Asia, non-basmati rice is exported from India to Africa continent. During2004-05, 2005-06,

2006-07 and 2007-08, a total quantity of non-basmati rice exports from India to Africa were

5.39 laky million tonnes, 5.59 laky million tonnes, 10.67 lakhmillion tonnes and 3.24 lakh

million tonnes, in which the percentage share of Africa continent was 27.09%, 31.14%,

24.44% and 25.73% respectively of total export of non- basmati rice from India. Next to

Africa continent, Europe continent has been importing non-basmati rice from India during

2004-05, 2005-06, 2006-07 and 2007-08. The exports of non-basmati rice from India to other

continents are very meagre. The exports to Europe continent during the last few years werean average more than 1.5 lakh million tonnes per year

C. PARBOILED RICE

Indian is exporting parboiled rice to Middle East and African countries, as these countries

prefer parboiled rice.

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BRANDING OF RICE

It's sign of the changing times. The imprint of a brand is getting bolder, even in a down-to-

earth commodity market like rice. Along with increasing consumer awareness and changing

preferences, the rice industry is witnessing change. No more is the friendly neighbourhood

grocer's word all there is to go by. In a country that produces thousands of varieties of rice,

branding has come to play a role in domestic as well as export markets. The brand is the new

mantra for success and basmati, also known as the 'king of rice', is in the midst of the action.

LAL QILLA TOPS THE LIST

India accounts for about 70 percent of the world's basmati production of 1.25million metric

tonnes. Of this, nearly 3.5 lakh metric tonnes is consumed in India and the rest is exported.

The industry is growing rapidly the world over with basmati becoming increasingly popular.

Of the total domestic basmati consumption of 3.5 lakh

metrictonnes, branded basmati accounts for about 1.25 lakh metric tonnes and has beengrowi

ng at the rate of 20 per cent a year. The Indian branded basmati marketisestimated to be

worth betweens. 600-700 crore. Rice producers have picked up

themarket trend towards preference for branded basmati and have jumped on to the bandwag

on so that there are more than 100 regional brands of rice in India. The trendsetter has been

mar Singh Chawalwala of Amritsar, whose Lal Quila brand is acknowledged as the best

selling rice brand in India, notching up sales of Rs 100 core year.

BASMATI RICE BRANDS OF INDIA

In a tough and a competitive international market of rice, it has become very much necessary

to give a brand name to even a food grain, rice. With the increase in consumer awareness and

shift in the position of customer from a mere buyer to the King of the Market, it has

become utmost essential to give a name to the essential food crop of India to survive in the

international market. The brand is the new mantra for success and basmati, also known as the

'king of rice', is in the midst of the action. Of the total domestic basmati consumption of 3.5

laky metric tonnes, branded basmati accounts for about 1.25 lakh metric tonnes and has been

growing at the rate of 20 percent a year. The Indian branded basmati market is estimated to

be worth betweens. 600-700 cores. Rice producers have picked up the market trend towards

preference for branded basmati and have jumped on to the bandwagon so that there are more

than100 regional brands of rice in India. Some famous brands available

inIndia,USA,Canada, U.K., Norway, Denmark, Holland, Sweden, Australia, Kuwait, Saudi

Arabia, Maenad many other countries are as follows :

Lal Qilla

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Double Diamond Brand Basmati Rice

Resham brand

Tilda Basmati rice

Pari Basmati Rice

Adore Basmati

Daw at Basmati

Kohinoor Basmati

Blue Label Basmati

All Haveli Basmati

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FACTORS INFLUENCING THE PRICE OF RICE

1. Weather:

Role of weather in rice production is immense. Temperature, rainfall and soil moisture are the

important parameters that determine the crop condition. Further, natural calamities can also

affect crops. Markets keep watch of these developments.

2. Minimum Support Price:

Changes in the minimum support prices (MSP) by the government also have immense impacton the price of rice.

3. Substitute Product:

Availability of substitute products at cheaper rate may lead to weakness in demand.

This situation happens especially when the main products price tends to become higher.

4. Consumption:

Rice consumption depends on two factors - population and income.

For example, rice is the staple food of Asia. Low-income groups

consumemore rice according to the per capita income increase.But as the incomeincreases,

there arrives a point when the consumption starts to dip. Income growth and reduction in

population result in a low consumption of rice.

5. Seasonal cycles:

Seasonal cycles are present in rice cultivation. Price tends to bellower as harvesting

progresses and produce starts coming into the market. At the time of sowing and before

harvesting price tends to rise in view of tight supply situation.

6. Demand:

Import demands as well as domestic demand influences the price of rice in domestic as well

as international market.

7. New technology:

Breakthrough in the technology may increase the productivity and would lead to more

supply. This may bring some softness in the price.

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PROBLEMS OF RICE EXPORT FROM INDIA

India is facing stiff competition in the world markets for export of rice. Besides, there are

many domestic problems for rice exporters. If these internal problems are relaxed to the

extent possible, the exporters may find easy way to boost rice export and such measures will

go a long way to sustain the exports.

Some of the major problems are:

1. High tax rate:

Indian rice iscostlierin the international market as compared to other competing countries in

the world because of imposing of varioustaxeson rice exports. These taxes include-Purchase

Tax (on indirect export), MarketFees, Rural Development Fund, Administrative Charges, etc.

as per the stateGovernment policy. In Pakistan, rice meant for exports specially the branded

ones; duties are extremely low or duty free.

2. Minimum Support Price:

The Minimum Support Price (MSP) for paddy isenhancedevery year by the Government ofIndia. Due to MSP, farmers are free to sell in the open market or to the Government at the

MSP depending on what is more advantageous to them.

3. High production cost:

The production cost goes up due to increase in the cost of inputs used for paddy cultivation.

That is why when paddy is converted to rice, it becomes costlier making it internationally

uncompetitive.

4. High competition in international markets:

Rice production meant for export purpose is having subsidy in other countrieslikeThailand,

Vietnam and Pakistan, which reduces the cost of production and thereby reducing the cost of

rice. Therefore, the export price of rice of such countries isomer competitive in the

international markets compared to Indian rice.

5. Inelastic prices:

Indian rice prices are inelastic due to relativelyhigh cost of productionwhereas the major rice

producing nations has decreased the price to capture the international markets.

6. Lack of proper infrastructural facilities:

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Rice mills have-not been fullymodernizedto ensure high milling recovery and reduce the

percentage of broken rice. Apart from this, there is lack of proper arrangements for

production of sufficient quantity of quality seeds needed for cultivation of rice for export

purposes.

7. Quality problems of Basmati rice:

Indian Basmati rice is facing aroma problem, because intensity of aroma in traditional

basmati varieties is not as high as it used to be. Post harvest handling of produce is another

important aspect. Generally, farmers are harvesting the crop at different moisture levels and

keeping the produce at higher moisture level for a longer period will impair the intensity

of aroma. In absence of genetically pure seed of basmati varieties, a variation in plant height,

grain size and maturity of the crop is found. This is one of the major reasons for poor quality

of basmati rice.

SUGGESTIONS FOR SUSTAINING RICEEXPORT

Rice export constitutes a considerable share in the national exports. Keeping in view the

importance of rice in the national export items, concerted efforts are required to be made to

further promote the export of rice. There is a good scope for India to take advantage of the

new trade opportunities for promoting the export of rice. This can be achieved if production

is made as per the requirements of international markets by increased investment in Research

and Development coupled with export friendly trade policies. The following are few of the

measures suggested to sustain the export of rice in future:

1. Breeding programme may be initiated to develop high yielding export quality rice

(Basmati, Non-Basmati, Long Grain Rice, etc.) to enable the exporters to sustain their export

in future.

2. Survey may be conducted to identify export quality belts/zones for production of rice to

meet the requirement of exports.

3. Extension activities may be strengthened to educate the cultivators for production of

quality rice to match the standards of international markets.

4.Low cost production technology may be developed to bring down the cost of production to

enable the exporters to compete with competing countries in the international markets.

5.Proper arrangements may be made for procurement and processing of rice export purpose

as per the requirement of international markets.

6. Proper arrangements may be made for production of pure quality seeds and making them

available to the farmers at subsidized rates.

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7. In case of basmati varieties, crop should not be allowed to lodge and there should be

proper water management in the field. If these are not attended properly, such situation may

affect both aroma and linear kernel elongation.

8. Post harvest operation is also very important. After harvesting, if produce is allowed to

remain at higher moisture level for a longer period, it will impair the intensity of aroma.

Some of the major problems :

Indian rice is costlier in the international market as compared to other competing countries

in the world because of imposing of various taxes on rice exports, such as Purchase Tax (on

indirect export), Market Fees, Rural Development Fund, Administrative Charges etc. as per

the state Govt. policy. In Pakistan rice meant for exports specially the

branded ones, duties are extremely low or duty free

Lack of proper infrastructural facilities

The Minimum Support Price ( MSP ) for paddy is enhanced every year by the govt. of India

The production cost goes up due to increase in the cost of inputs used for paddy cul tivation.

That is why when paddy is converted to rice, it becomes costlier making it internationally

uncompetitive

Rice production meant for export purpose is having subsidy in other countries, which

reduces the cost of production and thereby reducing the cost of rice. Therefore, the export

price of rice of such countries is more competitive in the international markets compared to

Indian rice

Indian rice prices are inelastic due to relatively high cost of production whereas the major

rice producing nations have decreased the price to capture the international markets

Rice mills have not been fully modernized to ensure high milling recovery and reduce the

percentage of broken rice

Lack of proper arrangements for production of sufficient quantity of quality seeds needed

for cultivation of rice for export purposes

The export is also suffering much due to the competition from other exporting countries like

Thailand, Vietnam and Pakistan because the cost of production in these competing countriesis low as compared to the cost of production in India

Indian Basmati rice is facing aroma problem, because intensity of aroma in traditional

basmati varieties is not so high as it used to be

Post harvest handling of produce is another important aspect. Generally, farmers are

harvesting the crop at different moisture levels and keeping the produce at higher moisture

level for a longer period will impair the intensity of aroma

In absence of genetically pure seed of basmati varieties, a variation in plant height, grain

size and maturity of the crop is found. This is one of the major reasons for poor quality of

basmati rice

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PROSPECTS OF RICE EXPORT FROM INDIA

India is facing stiff competition in the International markets from Thailand, Vietnam, U.S.A.

and Pakistan. There was a considerable growth in the export of rice from India during the

recent past, particularly in the case of non-basmati rice. There are several factors responsible

for this growth. In fact exports depend not only on our

abilityto sell, but also on the willingness of importers to buy. Sometimes major markets/impo

rters used to cut down their import due to their internal economic problems or good crop

harvest and trade also cut down inventories and people reduce spending. All these measures

reduce imports during that particular year. The prospects of export of basmati and non-basmati rice from India are discussed herewith:

BASMATI RICE

Awareness about basmati rice is spreading among different strata of the society in the country

and abroad. Basmati rice is possessing unique grain, cooking, eating and digestive qualities.

Hence, majority of people in the country and abroad have developed liking for basmati rice.

Because of its superfine quality, basmati rice is most preferred and also meant for high

premium value in the national and international markets. Thus, basmati rice is also stated to

be 'Pearl' of rice. Commercially,

Tarboro Basmati, Basmati-370 and Basmati Type-3

Are very popular. All these three varieties are similar in starch characteristics but based on

grain dimensions Tarboro Basmati is preferred much over Basamati-370. Similarly Basamati-

370 is preferred more over Basmati Type-3. Pusan Basmati-1 has been well accepted byte

trade and there are good prospects for export. In fact, Pusan Basmati-1 is at present most

profitable variety in rice, in spite of being highly susceptible to major insects, pests and

diseases. Under proper crop management condition farmers can get 4-6 tonnes paddy yield

per hectare. This variety is much favoured by the farmers, traders andconsumers.With the

every coming year; domestic as well as international demand for

basmatirice is increasing. If desired aroma in basmati rice along with other qualitycharacterist

ics is maintained, these measures may help to boost the export of basmati rice from India.

NON-BASMATI RICE

Non-basmati rice exports have also suffered much due to the competition from exporting

countries like Thailand, Vietnam and Pakistan because of their low cost of production. In the

recent past export of non-basmati rice was fluctuating year after year due to various reasons.

If rice exporters made their sincere efforts with Govt. supporting export policy, non-basmati

rice export is expected to increase in future.

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INCENTIVES TO RICE EXPORTERS OF INDIA

Various incentives are given to the exporters of rice, since Rice is most important cereal crop

of India. Also to make Indian Rice competitive in the international markets, Government of

India keeps on coming with new export friendly policies as well as incentives for the rice

exporters. The decision of the Union Government to allow non-basmati rice exports to

21African countries to the extent of one million tonnes is a welcome move, as it will help the

millers and the farmers, but clear guidelines have to be formulated and tenders should be

called for to ensure transparency, according to Vend Agawam, President of AP Rice

Exporters Association. He said in an interview here on Tuesday that the Directorate-Generalof Foreign Trade had issued a notification earlier this month allowing rice exports to 21

African countries. Three Government agencies -MMTC, STC and PEC- had been appointed

to facilitate exports to these. But our past experience shows that there is no transparency in

such transactions. Three or four major exporters manage to corner the contract and the others

are denied the benefit. It is of no benefit to the millers or farmers and only the three or four

big players stand to gain. Therefore, we want transparency in the transactions. Tenders should

be floated and all should be given a fair chance," said Agarwal.He said that after imposition

of ban on rice exports in 2007 some five lakh tonnes of rice was allowed to be exported to

Bangladesh in government-to-government deals but "only three or four major exporters

grabbed the contracts."He said the current situation in Andhra Pradesh market was causing

concern, as the FCI was not buying rice from the millers and the latter were therefore not

willing to buy paddy from the farmers. "The FCI is not in the market and exports are not

allowed. There is severe scarcity of storage space, as wheat from the North is dumped in

thegodowns here. Therefore, there is a lull and crisis in the market.

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EXPORT SUBSIDIES

Export subsidy reduction commitments have been made under theUruguayRound Agreement

on Agriculture (URAA) by Colombia, Indonesia, Uruguay, theEC and the United States.

The actual use of export subsidies has fallen short of the aggregate ceiling, although

information is difficult to get even from the WTO. Proposals for further reduction

commitments are likely to meet opposition from the EC. Other issues have arisen in relation

to export competition in rice, in particular the granting of export credits by the United States

of America. It should be noted, however, that export credits are also commonly used in

government-to-government deals, although there is little information available in connection

with such practices.

Export subsidies

Have been used by India since mid-2001 to promote exports of rice held by the government

Food Corporation of India.

According to the WTO, India is not eligible to use export subsidies on rice, but the country

claims that under there (Article 9-4) the country is exempt from commitments on export

subsidies for marketing, processing and transportation.

RESTRICTIONS ON EXPORTS

The Commerce Ministrys decision permitting export of up to 10 lakh tonnes (l)of rice to

African countries through parastatals is subject to the shipments containing minimum 25 per

cent broken content.The rice to be exported shall be with a minimum of 25 per cent of

broken, the Directorate General of Foreign Trades (DGFT) notification, dated May 6, has

said. On the other hand, you have a condition of a minimum export price (MEP) of $1,100

atone below which no basmati rice can be shipped out. And now, the same Commerce

Ministry is saying that you can export non-basmati rice only if it has a minimum 25 per cent

broken, which corresponds to the most commonly consumed grades here,

said. Vijay Sophia, former President of theAll-India Rice ExportersAssociation (AIREA).

According to him, if the Government was keen to gradually ease restrictions on rice exports,

the best way would have been to lower the MEP and make it applicable to both basmati as

well as non-basmati grain. By this, you will ensure that only high-end rice, which includes

premium non-basmati varieties such as Pony, Swarna Masuri and Red Matta, is exported,

while the rice consumed by ordinary segments remains within the country, he added. The 10

let of rice permitted to be exported has been allocated among 21 countries. This includes1,44,900 tonnes to Cote DIvorie, 1,41,300 tonnes to Senegal, 1,17,100tonnes to Nigeria,

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96,000 tonnes to Liberia, 72,400 tonnes to Togo, 68,800 tonnes

toGhana, 48,300 tonnes to Egypt, 38,500 tonnes to Sierra Leone, 36,250 tonnes toGambia,

24,200 tonnes each to Burkina Faso, Mali, Somalia, Benin, Guinea Bissau,Mozambique and

Zambia, 21,700 tonnes to Cameroon, 15,000 tonnes to Mauritius,12,100 tonnes each to

Djibouti and Zanzibar, and 5,550 to Tunisia.

STATISTICS AND CALCULATION OF RICEEXPORTS FROM INDIA

AVERAGE EXPORT PRICE AND ITS CALCULATION

Total quantity of rice exported and its value realized in rupees have been taken separately for

basmati and non-basmati rice and then the value of export divided by the quantity of rice

exported to arrive at the average export price of rice per quintal year wise for basmati & non-

basmati. We give below a year wise representation of average export price of basmati rice

and non-basmati rice in India:

It is seen from the above table that export price of basmati and non- basmati rice has

fluctuated significantly year after year. The reason for fluctuation in

averageexport price of rice is attributed todifferent quantity and quality of rice exported todiff

erent countries during different years.

A particular country may import a particular quality/grade of rice in one year and the same

country may importanother quality/grade of rice during next or subsequent years.

Thus, different quality andquantity of rice exported to different countries at different export p

rice rate may probably be the reason for fluctuation of average export price of rice in India.

EXPORT EARNINGS FROM RICE

The export earnings from the export of total rice (Basmati and other than Basmati) during

1998-99 accounted for 4.38% of total national export earnings. The

totalearnings from Basmati Rice during 200506 were 1.33% of total national exportearnings.

Similarly, export earnings from agricultural exports during 2005-06 were17.81% of total

national export earnings. The percentage share of rice exports to the total agricultural exports

during was 24.58% in which the share of Basmati Rice was 7.5%.This is more clearly shown

in the following table which shows the export earnings of the country:

EXPORT OF BASMATI RICE FROM INDIA

Basmati Rice, the leading aromatic fine quality rice in world trade, fetches good export price

in international market for its three distinct quality feature: pleasant aroma, super fine grains

and extreme grain elongation.Nearly two third of Basmati Rice produced in India is

exported. India accounts for about 70 percent of the world's basmati production. Each year,

India produces nearly 2.25 lakh tonnes of rice. Almost1.25 lakh tonne is consumed by Indias

residents. The rest is left for exports. The countries were Basmati rice is exported include

Saudi Arabia, UAE, European Union countries, USA, UK, Germany, Australia, Austria,Russia, Singapore, Iran, Kuwait,Behrain, Spain, Italy, France, Denmark and Norway.

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According to a latest report by APEDA, till February 2006, basmati export had already

crossed one million tonne mark and stood at 11.4 lakh tonne, which has been valued at Rs

2,775 crore.Year wise Export of Basmati Rice Export of Basmati

riceYearQuantity ('000 tonnes)Value (Rs. in Cores)

EXPORT OF NON-BASMATI RICE FROM INDIA

India is also exporting a substantial quantity of non-basmati rice to variouscountries in the

world. However, the export of non-basmati rice has been fluctuating year to year due to

weather conditions affecting the production of non-basmati rice. The export of non-basmati

rice from India was on its peak during2004-05and a total quantity of 45.41 lakh metric tons

was exported to different countries in the world. Again the export crossed to

43.66 laky metric tonsduring 2006-07, but during subsequent years, the export of non-

basmati rice again came down significantly due tovarious reasons. The countries where Non-

Basmati Rice is exported include SaudiArabia, Bangladesh, Australia, Bahrain, Ethiopia, Hon

g Kong, Korea, Sri-Lanka,Maldives, Mauritius, U.A.E., Malaysia, Qatar, Nepal, Indonesia,

Somalia, Singapore,etc

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CASE STUDY

In late 1997, an American company Rice Tec Inc. was granted a patent by the US patent

office to call the aromatic rice grown outside India 'Basmati'. Rice Tec Inc. had been trying to

enter the international Basmati market with brands like 'Basmati' and'

Texmati' described as Basmati type rice with minimal success. However, with theBasmati

patent rights, Rice Tec would be able to not only call its aromatic rice Basmati within the US,

but also label it Basmati for its exports. This has grave repercussions for India and

Pakistan because not only will India lose out on the 45,000 tonne US import market, which

forms 10 percent of the total Basmati exports, but also its position in crucial markets like theEuropean Union, the United Kingdom, Middle East and West Asia. In addition, the patent on

Basmati is believed to be a violation of the fundamental fact that the long grain aromatic rice

grown only in Punjab, Haryana, and Uttar Pradesh is called Basmati. According to the

Agricultural and Processed Food Products Export Development Authority

(APEDA), India is the second largest producer of rice after China, and grows over a tenth of

the world's wheat. Rice Tec Inc was issued the Patent number 5663484on Basmati rice lines

and grains on September 2, 1997.Accordingto Dr. Vandana Shiva, director of a Delhi-

based researchfoundationwhich monitors issues involving patents and bio piracy, the main

aim for obtaining the patent by Rice Tec Inc. is to fool the consumers in believing there is nodifference between spurious Basmati and real Basmati. Moreover, she claims

the"theftinvolved in the Basmati patent is, therefore, threefold: a theft of collectiveintellectual

and biodiversity heritage on Indian farmers, a theft from Indiantraders and exporters whose

markets are being stolen by Rice Tec Inc, and finally deception of consumers since Rice Tec

is using a stolen name Basmati for rice which are derived from Indian rice but not grown in

India, and hence are not the same quality."

In an official release, the government of India reacted immediately after learning of the

Basmati patent issued to Rice Tec Inc., stating that it would approach the US patent office

and urge them to re-examine the patent to a United States firm to grow and sell rice under the

Basmati brand name in order to protect India's interests, particularly

those of growers and exporters.

Furthermore, a high level interministerial groupcomprising of representatives of the ministrie

s and departments of commerce,industry, external affairs, Council for scientific and industrial

research(CSIR),Agriculture, Bio-technology, All India Rice Exporters Association (AIREA),

APEDA, and Indian Council of Agricultural Research (ICAR)were mobilized to begin an in-

depth examination of the case. The government of India was particularly concerned about the

patenting of Basmati. In the presence of widespread uprising among farmers and exporters,

the nation of India as a whole felt confident of being able to successfully challenge the

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Basmati patent by Rice Tec Inc. The law firm representing India in the dispute, agar and Suri

criticised the procedures for granting patents in the US claiming it is diametrically

opposite to the one followed in India and Europe.

According to them, India first examines a patent application, then widely publishes it for third

parties to challenge, and only then grants the patent. However, the US keeps the patent

application a closely guarded secret and grants it without allowing other parties to challenge

it. Indians feel that the US government's decision to grant a patent for the prized Basmati rice

violates the International Treaty on Trade Related Intellectual Property Rights

(TRIPS). The president of theAssociated Chambers of Commerce (ASSOCHAM) said

Basmati rice is traditionally grown in India and Pakistan andgranting patent to it violated the

Geographical Indications act under the TRIPS. As result, it is safe to say Basmati rice is as

exclusively associated with India and Pakistanis Champagne is to France and Scotch

Whiskey is to Scotland.In the wake of the problems with patents that India has experienced in

recentyears, they have now realized the importance of enacting laws for conserving biodiversity and controlling piracy as well as intellectual protection legislation that conform to

international laws. There was a widespread belief that Rice Tec Inc took out a patent on

Basmati only because of weak, non-existent Indian laws and the

government's philosophical attitude that natural products should not be patented.

According to some Indian Experts in the field of genetic wealth, India needs to formulate a

long-term strategy to protect its bio-resources from future bio-piracy and or theft. The type of

measure being utilized was accusing the Rice Tec Inc and the US of violating the

Geographical indication act of the TRIPS agreement in the WTO. But first, India and

Pakistan filed a petition to the US patent office to re-examine the patent on Basmati claiming

Basmati has been grown in their regions for thousands of years and is common knowledge in

India and thus cannot be patented.

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CONCLUSION

India is one of the richest countries in the world India in terms of possessing tremendous

diversity in rice varieties. There are different varieties of rice-depending on the weather, soil,

structure, characteristics and purposes.

The multifunctionalityof agriculture in terms of environmental, social andcultural concerns

is being used to defend the permanence of blue and green box payments. In Japan, most of

the emphasis on multifunctionality and food security is inrelation to rice.

In developed countries where rice is a non-marginal crop, theelimination of blue or green box

support would considerably impair the sector. Rice production sites are often the natural

habitat of a wide variety of birds and plants.

Water management in ricelands ensures that the soil desalination process essential to themain

tenance of land fertility takes place. Environmental concerns are consequently frequently

used weapon in defence of the sector.

Food safety is not particularly relevant to rice, although there is increasingconcern regarding

GMOs (genetically modified organisms). While some rice varieties are being developed with

new genes (e.g. carotene-enriched rice), they are not yet tradedinternationally.According to

Dr. Rich aria, one of the most eminent rice scientists of the world, 400000 varieties of rice

existed in India during the Vedic period. He estimated that, even today 200000 varieties of

rice exist in India which is indeed an exceptionally high number. This means that even if

a person eats a new rice variety every day of the year he has to live for over hundred years

without reusing a variety. Every variety has a specific purpose and utility. The harvesting

area of rice in India is the world's largest. Rice is an important aspect of life in the Southeast

and other parts of Asia. For centuries, it has been the cornerstone of their food and culture.

During this period, farming communities throughout the region developed, nurtured, and

conserved over hundred thousand distinct varieties of rice to suit different tastes and needs.

Rice is a major food staple and a mainstay for the rural population and their food security. It

is mainly cultivated by small farmers in holdings of less than 1 ha. Rice is also a wagecommodity for workers in the cash crop or non-agricultural sectors. This duality has given

rise to conflicting policy objectives, with policy-makers intervening to save farmers when

prices drop, or to defend consumer purchasing power when there are sudden price increases.

Rice is vital for the nutrition of much of the population in Asia, as well as in Latin America

and the Caribbean and in Africa; it is central to the food security of over half the world

population, not to mention to the culture of many communities. Rice is therefore considered a

strategic commodity in many countries and is, consequently, subject to a wide range of

government controls and intervention

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AGENCIES EXPORTING RICE

1.SHRIL:An ISO 9001-2000 Certified Company dealing in Indian long grain white basmati

rice, brown basmati rice.

2. SRI GAJANAN AGRO MILLS (INDIA) PVT. LTD, NIZAMABAD,

ANDHRAPRADESH: Since last 50 years in the processing of high quality premium

gardening basmati rice and broken rice.

3. TRISTAR OVERSEAS, New Delhi, Delhi: Exporter of variety of basmati rice like

traditional basmati rice, pure basmati rice, sherbet rice, cabman basmati rice, Parma basmati

rice

4.USA RICE:USA Rice Federation is a national association representing producers, millers

and allied businesses advancing the use and consumption of U.S.

5. BASMATI ASSOCIATES, Navy Mumbai, and Maharashtra: Basmati rice traders and

exporters and provides the premium brand of basmati from the company JagatAgro in

Mumbai.

INFORMATION ON THE COMPANY

Theorganization we visited is a rice export mill named

Korari Rice Mill Enterprises.

It is situated in Nallasopara in Thane district of Maharashtra, India.

Mr. Karari is the owner of the firm.

They are rice, grain merchant andcommission agent.

KarariRice Mill Enterprises deals in long grain white basmati rice, brownBasmati rice andbroken rice.

Karari Rice Mill Enterprises,Gass Road, Nallasopara (W),Thane-401203, Maharashtra.

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BIBLIOGRAPHY

www.indianriceexports.com

www.agriculture-industry-india.com

http:/exportsproblems.com

www.basmatirice.com

www.lalqila.com