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An unlikely economic battle is cooking between India and Pakistan7 min read

June 21, 2021 5 min read


An unlikely economic battle is cooking between India and Pakistan7 min read

Reading Time: 5 minutes

India and Pakistan have had a long history of clashes over power, land and more. But this time there is an ensuing battle over something that is found in every Indian and Pakistani household:

Image: Giphy

Rice! Specifically, basmati rice!

What is special about basmati rice?
Basmati rice is a long grain rice that grows in the foothills of the Himalayas. The grain is long and narrow, and has a firm texture. It has pointy ends and a nutty flavour. Traditional basmati is grown in India and Pakistan.

Image: Spruce ©Chelsea Damraksa​

Both India and Pakistan grow enough basmati rice to meet domestic needs. 50% of India’s population depends on rice for sustenance. Pakistan annually consumes around 2 million tonnes of rice domestically. But the two countries also export the surplus grain to other countries.

What is export and how does it work? Let’s figure that out with a story:

There are two friends, A and B, who live in different countries. A lives in the fancy country of Moneyville, and B lives in the humble country of Pleasantville. A needs a flower that is only available in Pleasantville. B supplies it to him. A pays in the currency of Moneyville which is a lot more than the currency of Pleasantville (One Moneyville dollar= 20 Pleasantville dollars). Now, B must have incurred some cost in sending the flower to A. First, he would have bought the flower, taken care of it, packaged it for the travel, and paid the courier charges. So, he keeps the money to satisfy his costs. With the surplus, he buys more seeds and creates a garden of that flower. Now, A shows the flowers to many friends of his from Moneyville, and they all reach out to B to buy the plant. Now, B’s Pleasantville also gets richer with the flow of Moneyville money.

How does export work | Analysis of the story

When B sent A a product of Pleasantville for a price measured in the currency of Moneyville, he made an export. A incurred an import. Because B received foreign money (of more value than internal money), he could use it to invest in other economic opportunities. He could create a new business that brought more foreign money and more chances of growth for Pleasantville. This is how export works.

Export brings foreign exchange, and helps the economy. It also makes the two countries competitors.

Why are they fighting?

The problem arose when India applied for the Protected Geographical Indication (PGI) status from the European Union’s Council on Quality Schemes for Agricultural Products and Foodstuffs.

Image: Giphy

In simple words, a PGI status will give India the sole ownership of the basmati title in the European Union.

The European Union (EU) is a political and economic union of 27 countries located in Europe.

A Geographical Indication is a sign used on products that have a specific geographic origin, and have properties specific to that location. Both India and Pakistan have GI status for the basmati produced in their areas. But a PGI claims a right over this sign. Indian Darjeeling Tea and Columbian coffee enjoy PGI status. Not only does this grant protection against misuse and imitation, it also gives a quality stamp allowing the product to be sold at a higher price.

1. Basmati rice is a pretty cool form of rice.
2. Exports bring in foreign exchange that gives a boost to internal economy.
3. India and Pakistan are the only two exporters of basmati rice to the world. This makes them competitors.
4. India has asked for PGI status over basmati from the European Union. This has made Pakistan anxious.

Moving on…

Why is Pakistan worried?

A worker fills a sack with rice at the Al-Barkat Rice Mills on the outskirts of Lahore. . Image: Aj Jazeera. ©Arif ALI

India and Pakistan are the only exporters of basmati to the whole world. India is the largest exporter with a whooping 70% share in the world market.

But India struggled to meet the EU’s pesticide standards.

Consequently, over the last years, Pakistan expanded its exports to the region. As such, two-third of the basmati in the region, amounting to 3,00,000 tonnes, comes from Pakistan.

If India is granted the PGI status for its basmati, Pakistan will lose a huge market.

Why is India worried?

India has had a history with feuds over basmati. Apart from the ongoing clash with Pakistan, India faced another basmati dispute with a US company called RiceTec. RiceTec created variants out of the exported basmati grains, and filed for patent over the resultant grains, called Kasmati, Texmati and Jasmati, to name a few.

A patent is a government license issued to a party that gives it sole right to produce, use or sell an invention.

The patent was granted in 1997. India worried that its homegrown basmati will lose demand in front of these hybrid variants. A legal battle ensued between the Indian government and the American company resulting in the US limiting the patent to only three of the company’ s variants in 2001.

But India faced some internal triggers as well.

Labourers thrashing basmati paddy in the field at a village near Kharar. Image: The Indian Express ©Jasbir Malhi

Basmati is an export-oriented product, and a very high-yielding one too! As of now, GI recognises Himachal Pradesh, Punjab, Haryana, Uttarakhand, Uttar Pradesh, Delhi and Jammu and Kashmir as producers of Basmati. But there have been many disputes over granting this protected status to basmati rice having the same qualities but a different place of origin. For example, Madhya Pradesh is lobbying for this status for the basmati grown in the area.
The All India Rice Exporters’ Association (AIREA) has a problem with this as this makes the GI very flexible. They fear that this will give an impetus to production rivals, Pakistan and China, to produce basmati anywhere in their territory thus compromising the exclusivity of basmati.

The way forward

India claims that it has not said that it is the sole producer of basmati anywhere in the appeal to the EU. India believes that the competition will continue to remain healthy even if the status is granted.

India and Pakistan have been exporting and competing in a healthy way in different markets for almost 40 years… I don’t think the PGI will change that.

Vijay Sethia, Former President of the Indian Rice Exporters Association, Aj Jazeera

Meanwhile, Pakistan hopes that India will consider submitting a ‘joint application’ to the EU committing to the shared heritage of the grain.

If EU rules in favour of India, Pakistan can always appeal to European courts.

India and Pakistan have a shared culinary history all the way from biryani to pulao but for now, they seem to be in thick soup, or sticky rice, if you may!

With excerpts from Al Jazeera and The Indian Express

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