Iraq is a major rice importer in the Middle East and the only source in the region to receive substantial resources from Asian and Western Hemisphere suppliers. This year, however, Iraq has purchased almost all of its rice from India, which has more than 80 percent market share as of August.
While Iraq has so far been able to import nearly 700,000 tonnes, its 2020 imports have stalled significantly due to the economy struggling with low oil prices. With low overall imports, tight market competition has made India the largest rice exporter in Iraq.
Most of Iraq’s imports from India are basmati, a popular fragrant rice (jasmine rice) similar to locally grown rice, amber. The rest of the rice purchased is usually long-grain milled white rice, small quantity purchase is medium grain milled white rice. As basmati rice becomes more popular, Iraq’s imports of Indian basmati rice, which were less than 20,000 tonnes a decade ago, have risen to more than half a million this year.
Although the price of basmati is significantly high as compared to white rice, the difference between the price of basmati and the price of white rice has come down this year. The private sector has been able to sustain these imports due to the relatively low prices of basmati and the consumers still prefer the taste of jasmine rice.
In addition to basmati rice from India, Iraq also imports jasmine rice from Vietnam to meet its demand for aromatic rice(fragrant rice). However, with Vietnam banning rice exports earlier this year, India regained and retained Vietnam’s lost market share.
Iraq rice consumption
Rice is the staple food and is considered essential for the Iraqi diet. Iraq is a predominantly long-grain milled rice market but Kurdish people in the north prefer medium grain rice. The rice consumption is more than 90 pounds per year in Iraq. Most Iraqis eat rice every day, and about 90 percent of it is imported. In 2019, Iraq was the 8th largest export market for India, bringing in US $ 70 million worth of rice.
The IGB(Iraqi Grain Board) manages almost 85 percent of all rice imports to fill the amount of rice required for distribution in the Public Distribution System (PDS). Which monthly distributes basic food items, including three kilograms of rice, to Iraqi citizens.
In 2016, the Indian Embassy in Baghdad and the Iraqi Ministry of Trade signed a Memorandum of Understanding to facilitate tenders for Indian rice. This has had a positive effect on India’s rice exports and was extended in 2018 for three additional years. Since the first MOU was signed in 2016, India has shipped USD 8815 million to Iraq.
India rice export market overview
India’s emphasis on expanding port handling infrastructure, development of value chain involving key stakeholders and efforts to find new opportunities in the countries or markets for rice exports, in the last few years have led to huge growth in rice exports.
In the first seven months of the current financial year (2021-22), during April-October 2020-21, India’s rice exports increased by more than 33% from 8.91 metric tonnes to 11.79 metric tonnes. It is estimated that in 2021-22, India’s rice exports are likely to exceed the record 17.72 MT achieved in 2020-21.
Despite the logistical challenges posed by the Covid 19 pandemic, India has continued to increase the impact of rice exports to African, Asian, and European Union markets, accounting for the largest share of the global rice trade. Strong global demand helped boost India’s rice exports.
In 2020-21, India shipped non-basmati rice to nine countries: Timor-Leste, Iraq, Brazil, Papua New Guinea, Zimbabwe, Burundi, Eswatini, Myanmar, and Nicaragua, where shipments were exported for the first time or earlier were small in volume.
How to export rice to Iraq
The following sections will highlight some important documents that will allow you to export rice from India.
Company registration – Company registration is important to start an export business in India. The process of getting company registration is straightforward. All you have to do is visit the website of the Ministry of Corporate Affairs and submit an online application in SPICe + form.
Company PAN Card– PAN Card acts as identification proof for a company and it is extremely mandatory to obtain. The PAN card of the company usually encloses a ten-digit alphanumeric code that contains all the information about the individual. The application regarding the PAN card can be made on the NDSL (National Securities Depository Limited) official portal.
Import Export Code (IEC)- IEC is a mandatory requirement for exporters and importers. You can contact the Directorate General of Foreign Trade (DGFT) website to apply online. To avail of the benefits of IEC registration, applicants are required to attach some important documents with the application. We will discuss IEC in the next part of this blog.
ISO Certification- ISO certification indicates that the company is adhering to quality standards for the production of goods. To get such a certificate you have to go through an avalanche of requirements and procedures. ISO certification guarantees unmatched quality in terms of products and services offered by professional components.
GST Registration – Under the GST Act, the IEC holder has the option to pay GST on shipping and then demand a refund for it. The refund claim has been facilitated for exporters across India, this means that the exporter will no longer have to file separate refund applications for the export of goods or services. The shipping bill itself acts as a refund claim for exporters.
Import Export Code will help you to send food abroad. The IEC directs eligible persons in accordance with the rules prescribed under the Directorate General of Foreign Trade Export-Import Policy (EXIM) and Foreign Trade Policy. Following are the procedural instructions for obtaining import-export code through an online process. Be sure to follow the procedure knowingly without leaving any steps.
