New Delhi: In a significant policy shift, India has ended its ban on the export of non-basmati rice, setting a minimum export price of US$490 per ton in an effort to rejuvenate trade with Asian nations. This move is expected to impact rice prices regionally, affecting major exporters like Thailand, Vietnam, and Pakistan.

According to JS Global, rice prices have been declining in anticipation of India's policy reversal. Prices for Thai and Vietnamese parboiled rice, with 5% broken grains, have decreased by approximately 10% since early September. Pakistani rice prices have also dropped by around US$25 per ton earlier this month. The decision follows a substantial increase in export prices across Asia due to previous restrictions imposed by India in mid-2023, which saw non-basmati exports banned and a hefty export duty of 20% on basmati rice.

Pakistan is projected to report a record high rice production of approximately 10 million tons this year, as per estimates from the United States Department of Agriculture (USDA). This marks a significant increase from the 9.8 million tons produced last year and substantially higher than the 10-year average of 7.7 million tons. The increased production was largely motivated by the higher farm returns following India's export ban, which spurred greater area under rice cultivation.

Despite the record production, the re-entry of Indian rice into the market is expected to slow the growth pace of Pakistan's rice exports. Initial forecasts for the fiscal year 2025 suggest a potential decline in export volumes to 5.6 million tons. Moreover, a sensitivity analysis on the potential revenue impact for Pakistan indicates that under various price and volume scenarios, export revenues could decrease by up to 12% year-over-year in FY25.

This policy change by India is likely to reintroduce competition in the market, potentially affecting Pakistan's position as the world's fourth-largest rice exporter and its improved share from 8% to 11% in global exports over the past year. The broader implications for Pakistan's external balance and current account deficits, particularly in a worst-case scenario, could be significant, warranting close monitoring and strategic adjustments in the coming months.