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NEW DELHI: India has signed contracts to export about 500,000 metric tons of new season basmati rice to cash in on robust demand from top buyers in Europe and the Middle East, traders said on Wednesday.

India annually exports more than 4 million tons of basmati - a premium long-grain variety famed for its aroma - to Iran, Iraq, Yemen, Saudi Arabia, the United Arab Emirates and the United States, among others.

Europe is another big market for the rice.

After imposing a ban on non-basmati white rice exports in June to stabilize domestic prices, India set a floor price, or minimum export price (MEP), of $1,200 a ton for overseas sales of basmati in August.

However, as the floor price hampered exports of the premium variety and saddled farmers with large stocks of new-season rice, the government last month cut the floor price for basmati exports to $950 per ton.

India cuts floor price for basmati rice exports to revive shipments

Trade came to a standstill after the August decision, but the lowering of the floor price has breathed new life into basmati rice trade, the traders said.

“There’s been a great deal of interest in India’s new basmati rice crop and so far we have signed export contracts for around 500,000 tonnes,” said Prem Garg, president of the Indian Rice Exporters Federation.

“Normally we start getting orders for the new crop in September and October but the MEP of $1,200 a metric ton made it difficult for us to sign any deals,” he said.

Indian traders have signed basmati export deals between $1,000 and $1,500 a metric ton, two exporters including Garg said.

Turkey, Iraq and Saudi Arabia are top buyers of the rice so far this year, aid Vijay Setia, a leading exporter from Haryana, a top basmati rice producing state in the north.

“Despite the MEP of $950 a metric ton, it looks like we’ll be able to export our usual annual volume of around 4 million metric tons,” Garg said.

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