The strong demand revival, especially from Iran, may help Basmati rice exports to close the year with a 20 per cent growth at Rs 26,000 crore.
It is estimated that basmati exports may cross Rs 26,000 crore in FY18, clipping at 20 per cent over the past fiscal year and at Rs 28,000 crore in FY19, Icra said in a report today.
The report however noted that export volume has largely remained stagnant, which though is in line with the past few years.
Basmati export has witnessed strong revival in the current fiscal with 22 per cent growth in value in the first nine months, after having been on the downward trajectory between FY15 and FY17.
"This buoyant export growth has been fuelled by a 23 per cent surge in average realisation of Rs 64,594 per tonne in the first nine months of FY18 as against Rs 53,985 per tonne a year ago.
Historically Saudi Arabia and Iran have been the largest importers from India, accounting for 40-45 per cent share. However, Saudi's share has declined in recent years - it stood at 14 per cent so far in FY18. But this was largely absorbed by Iran, whose share has surged to 28 per cent.
Iran had imposed a temporary ban on imports around August 2017 which was lifted in January 2018. While this development is likely to support the industry growth in the last quarter of the current fiscal, greater dependence on Iran as a major export destination could spell volatility.
For the second year in a row, paddy prices have firmed up by 20-25 per cent in 2017 procurement season, largely due to 10-15 per cent lower paddy sowing after a moderate monsoon; and improved demand for Basmati rice in international markets.
This increase in paddy price is likely to provide a fillip to Basmati prices in FY19.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
