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After six-year wait, basmati rice scales China's trade walls

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Chinese authorities have finally given the green light for Indian exports of basmati rice following a long and tortuous six-year process that has been seen as underscoring the difficulties of navigating the complex bureaucratic hurdles that bar entry into the China market.

China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) announced last week it would allow imports of basmati rice from India. Negotiations were on since at least 2006, when President Hu Jintao visited India. It took another visit from Mr. Hu six years later, when he travelled to New Delhi last month for the BRICS Summit, to give the final push to a long-running process.
Indian exporters can begin shipping basmati rice to China after both countries agree on a mutually satisfactory quarantine protocol. Once a quarantine certificate is agreed by both sides, China will have to circulate the certificate to all its ports and customs authorities before imports can begin entering the country.
Indian industry groups have estimated between $50-100 million potential trade. The move will have little impact on the overall trade relationship: the trade deficit between both countries reached $27 billion last year in China’s favour, with bilateral trade reaching a record $74 billion.
Two substantial barriers Indian exporters will face when entering this market are the established presence of Pakistani basmati rice brands and the niche demand for the product, largely from international five-star hotels and the small number of Indian restaurants in China.
More sticky rice varieties, which can be eaten with chopsticks, are popular in China and basmati rice is likely to remain more a novelty than become a staple.
“There is a long way to go, but this is still a welcome move,” an official said. “We hope to start with five-star hotels and restaurants, and there is sure to be growing demand with the increasing number of Indian businessmen who are now travelling to China.”
The long, six-year process that began in 2006 has underscored both the difficulties of gaining entry into the China market and the reluctance of Chinese authorities to allow agricultural and food products from India. India is still waiting for the green light for more than a dozen other agricultural products.
Following Mr. Hu’s 2006 visit, it took almost three years – until September 2009 – until an AQSIQ team even responded to an invitation from Indian officials to visit India.
An AQSIQ team toured rice mills and held talks with officials in the Ministry of Agriculture during the visit. In December of that year, India submitted an exhaustive report to Chinese authorities, running into hundreds of pages, detailing the pesticides use, climate conditions, soil type and processing and storage procedures that were being followed.
After hearing no response from the Chinese side, Minister of Commerce and Industry Anand Sharma raised the issue in January 2010 during the eighth meeting of the Joint Economic Group (JEG) meeting in Beijing.
The issue was raised again this year at another working group meeting between officials at the joint secretary-level.
The BRICS Summit in New Delhi last month was seen as giving much-needed momentum to several pending trade issues. In the weeks since, China has also granted landing rights to Zee Television after another six year-long process.
“Both these decisions have been a long time coming,” an official said. “But we are finally beginning to see things moving”.

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