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Tuesday, April 24, 2012

China to import basmati rice from India

It will be interesting to see if basmati rice sells in China, given the different taste for Chinese comsumers compared to Indian consumers.

Chinese authorities have finally given the green light for Indian exports of basmati rice following a long and tortuous six-year process that has been seen as underscoring the difficulties of navigating the complex bureaucratic hurdles that bar entry into the China market.

China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) announced last week it would allow imports of basmati rice from India. Negotiations were on since at least 2006, when President Hu Jintao visited India. It took another visit from Mr. Hu six years later, when he travelled to New Delhi last month for the BRICS Summit, to give the final push to a long-running process.

Indian exporters can begin shipping basmati rice to China after both countries agree on a mutually satisfactory quarantine protocol. Once a quarantine certificate is agreed by both sides, China will have to
circulate the certificate to all its ports and customs authorities before imports can begin entering the country.

Indian industry groups have estimated between $50-100 million potential trade, which is not signficant in term of overall China India trade. The move will have little impact on the overall trade relationship: the trade deficit between both countries reached $27 billion last year in China’s favour, with bilateral trade reaching a record $74 billion.

Two substantial barriers Indian exporters will face when entering this market are the established presence of Pakistani basmati rice brands and the niche demand for the product, largely from international five-star hotels and the small number of Indian restaurants in China.

More sticky rice varieties, which can be eaten with chopsticks, are popular in China and basmati rice is likely to remain more a novelty than become a staple.

“There is a long way to go, but this is still a welcome move,” an official said. “We hope to start with five-star hotels and restaurants, and there is sure to be growing demand with the increasing number of Indian businessmen who are now travelling to China.”

The long, six-year process that began in 2006 has underscored both the difficulties of gaining entry into the China market and the reluctance of Chinese authorities to allow agricultural and food products from India. India is still waiting for the green light for more than a dozen other agricultural products.

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