Rice is one of the most crucial food crops in the world and a staple diet for nearly half the global population. Over 90% of the global rice output and consumption is centred in Asia, wherein the world's largest rice producers, China and India, are also the world's largest rice consumers.
India accounts for over 70% of the world's basmati rice production. Basmati rice constitutes a small portion of the total rice produced in India.
By volume, the share of basmati rice is around 6% in 2014-15, even as by value, basmati rice exports account for 57% in 2014-15, of India's total rice exports.
Basmati rice exports have increased at a compounded annual growth rate (CAGR) of 27% from Rs 28.24 billion in 2004-05 to Rs 275.98 billion in 2014-15.
The proportion of basmati rice exports in India's total exports has increased from around 0.6% to around 1.3% during the last one decade.
While basmati rice is consumed across the globe, West Asian countries account for 75% of Indian basmati rice exports in 2014-15.
Within West Asia, Iran and Saudi Arabia are the two largest buyers, together accounting for over 50% of basmati rice exports from India.
However, even as Iran emerged as one of the largest importers of basmati rice in recent years, the country imposed a ban on basmati rice imports from India in 2014-15, citing its own healthy rice crop and large basmati inventory.
Commenting on pricing scenario, basmati paddy is also vulnerable to cyclical price fluctuations. Higher prices in the market encourage higher basmati paddy cultivation, which increases supply in the next season.
This depresses the price, thereby erasing gains and shifting farmers away from basmati paddy cultivation.