Saurabh Gupta | 10 May, 2008
Dr. Raj K. Solani, MD Rup International in an exclusive interview to SME Times has said that if the government really wants to help SMEs and small exporters they need to remove the ban on exports on non-basmati rice and also waive off the export duty on basmati rice.

Excerpts of the interview...

In order to curb inflation, the Centre has already banned the export of non-basmati rice. Do you agree this move?
Dr. Solani: For the government's point of view this move is good to beat inflation. But along with this move the government needs to keep the challenges and hurdles of micro small and medium enterprises (MSMEs) in mind.

Besides, this ban on non-basmati still not applicable to few big companies exporting to Bangladesh. Why this discrimination? According to a DGFT notification dated February 18, the Centre had imposed an export of non-basmati rice, which was not applicable to export of 1010 MT of non-basmati rice to Bangladesh. But what was the reason for this relief to Bangladesh is questionable.

The ban is on non-basmati rice, but big exporters are exporting the premium quality rice, which is similar to basmati, in the name of basmati. I think the government is hand in glove with big rice exporters with the big companies getting away taking advantages of the loopholes in the system.

The government is actually promoting corruption by lowering the export price on basmati rice from $1,200 to $ 1,000 per tonne. Now what will an exporter do who has already made a one-year overseas contract at $ 1200 per tonne? Will he take a cut of $ 200 per tonne? The government needs to take some healthy steps on this issue in favour of the exporters.

There is an export duty of Rs 8,000 per tonne on the export of rice imposed by the Centre. What is your take on this?
Dr. Solani: Our government has imposed an export duty of Rs 8,000 per tonne on basmati rice to tame inflation which is hitting the overseas sale. Our profits are already eroding substantially due to ban on non-basmati rice from India.

We are small players, all the more reason for the government to take extra care of us. Plus the SME sector plays a major role in the development of the Indian economy, so the authorities now have to make things more conducive for us to do business.

Do you agree that this export duty is harming the interests of the farmers, labourers, traders and the  industry as a whole?
Dr. Solani: The basmati variety is a premium farm produce having no effect on inflation and now the new export duty would cut will eat into the profits of both the farmers and exporters.

What are the factors that effect the production and export of rice? How you see the crop production in India this year (2008-09)?
Dr. Solani: Weather has profound influence and the monsoons play a key role in the food grain production and productivity. Last fiscal (2007-08) we did have a good crop production all over India and I see no kind of shortage of grains.

The shortage, I feel, is inflated and the government is just restoring to a trail-and-error method to tame inflation which might adversely affect their election prospects.

How much affect have you seen on the export business of rice due to rupee appreciation?
Dr. Solani: With the dollar falling against the rupee, our profits are lessening day by day. Since payment in the export business takes a considerable time from the day the consignment reaches our clients to the time he pays us, the recent trend of the depreciating dollar lessens the profits ultimately. For instance, I fix a consignment at price of Rs. 47 per US dollar, but by the time we get remittance it will be Rs. 40 only. So you can imagine how much we are losing.

Our finance minister talks a lot about SMEs, but actually does nothing for them. This government did not do a single work for the SMEs and instead has closed all doors for SMEs' development. They have issues on SMEs to discuss in a seminar, but in reality all these remain on mere papers. The government is focusing only in real estate, which is the main cause of inflation. If the government really wants to uplift the SMEs, than it really needs to relook its policies and speed up the implementation process. I get a feeling that the government is not in favour of the export community.

Pakistan has set a minimum export price for some of the premium quality grains to boost local availability amid a global shortage of the commodity. Do you think this will harm our rice industry not only in global markets, but also in local markets?
Dr. Solani: No, we don't have any type of fear from our neighbouring countries like Pakistan and Bangladesh because they don't have that much of crop production in their country like we do.

We have higher export price compared to Pakistan, so 40 percent of the rice from Pakistan is going via our country which is good and profitable for us.