NEW DELHI, Dec 27: India's basmati rice exports are likely to fall by 10 to 15 per cent in the year to March 2007 as prices of the aromatic grain have shot up, industry officials said on Wednesday.The price of paddy has risen 40 per cent from a year ago to Rs18.50 ($0.40) a kg and is likely to pinch overseas buyers, they said.

India exported 1.1 million tons of basmati rice in the year to March 2006, a senior industry official said.

“Consumers will question such a sharp price rise,” R.S. Seshadri of Tilda RiceLand Pvt. Ltd., one of the top rice exporting firms, told Reuters.

India and Pakistan grow and export aromatic rice and the main buyers are the Middle East and Europe.

Anil Adlakha, executive director of the All India Rice Exporters Association, said lower paddy output could be one of the reasons for the price rise but production was difficult to estimate.

“We will get to see a clear impact of the price rise in the next one to two months,” he said, noting exports usually picked up every year during this period.

India produces about 4 million tons of basmati annually, while total rice output is about 90 million tons.

“Pakistan has indeed become more competitive. But for the quality conscious customers, there is no competition with traditional Indian basmati,” said Harvinder Pal Singh, partner of Amar Singh Chawal Wala, a leading north Indian rice exporter.

He said buyers were usually willing to pay a 10 to 15 per cent premium for Indian basmati but currently Indian prices were 20 per cent higher.

Adlakha said exports of non-basmati rice were also likely to fall to 3 million tons in the financial year ending March 2007, from 3.9 million tons last year.

Indian rice firms were exporting small lots to honour previous export deals, Prem Bajaj, managing director of New Delhi-based Lal Mahal group, said, adding the lot size was 40,000-50,000 tons a month compared with 150,000 tons a month about three months back.

For 25 per cent broken rice, the Indian price was $233 on a free-on-board basis, while the Pakistani price was $223, he said.

He said rice millers in the southern state of Andhra Pradesh, which has good supplies of the crop, were focusing on sales to the state-run Food Corporation of India (FCI), which was paying competitively for exports.

Bajaj said exports from that state were likely to pick up only in mid-January once the FCI's demand had been met.

He said not many states had surplus rice for export at the moment but there was also no shortage in the domestic market. —Reuters