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India Punjab State Plans Minimum Support Price for Basmati Rice, Tax Concessions for Traders

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The loss in non-basmati rice production in India’s northern state of Punjab due to decreasing water supply in 2013-14 could turn into gain for basmati rice, with the state government planning to announce several benefits for farmers and buyers of basmati rice ahead of this year's Kharif (main) crop season (June - November).

According to local sources, the Punjab government may announce an MSP of around Rs. 2,500 per quintal (about $442 per ton) for basmati paddy rice in 2013-14 to lure farmers to switch from non-basmati rice to basmati rice cultivation under the state government’s crop diversification policy. The Punjab Chief Minister is also likely to announce tax benefits for traders if they purchase basmati rice at prices above the MSP. According to local traders, purchase prices of basmati paddy rice were around Rs. 2,400 – 2,500 per quintal (about $425 - $442 per ton) during sufficient supplies last year and around Rs. 3,500 per quintal (about $620 per ton) during the lean season.

Earlier this year, Member of Parliament and rice scientist Prof. M.S. Swaminathan said that basmati rice requires less water compared to non-basmati rice. The state government has since placed basmati rice among other crops in its crop diversification plan. Currently, around 750,000 hectares of total rice area of around 2.75 million hectares in Punjab is used for basmati rice cultivation. The state government plans to increase basmati rice acreage to around one million hectares in the next five years.

India produces around 7-8 million tons of basmati rice annually, including around 2.5 million tons produced in Punjab. India is the world's largest exporter of basmati rice with around 3.5 million tons of annual basmati exports.

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