India bans non-basmati rice exports, ups wheat price

By Mayank Bhardwaj

NEW DELHI (Reuters) - India on Tuesday banned exports of non-basmati rice to rein in prices and decided to pay farmers a higher price for wheat and rice paddy to ensure enough supplies of grains in the domestic market.

"The exports of non-basmati rice have been banned with immediate effect," Finance Minister Palaniappan Chidambaram told a news conference.

The country, the world's third-largest exporter after Thailand and Vietnam, annually sells around 4.0 million tonnes of rice, including about a million tonnes of aromatic Basmati.

Chidambaram said the government also decided to raise the purchase price for paddy to 695 rupees per 100 kg from 645 rupees for rice of common variety and 725 rupees from 675 rupees for Grade A variety.

In addition, the government raised the purchase price for wheat to 1,000 rupees per 100 kg from 850 rupees. Wheat is sown in November and harvested in the summer months from April.

Agriculture Minister Sharad Pawar told Reuters in an interview this week the government would take a decision on whether to stop non-Basmati rice exports at an appropriate time.

Rice purchases from farmers had been lagging this year with farmers holding back stocks on expectation that prices would increase in the coming months.

India's state agencies had by Tuesday purchased 2.94 million tonnes of rice from farmers, down from 3.77 million tonnes at the same time a year ago.