Structural Changes in Basmati Rice Exports from India: A Markov Chain Analysis

Abstract

Basmati rice is considered a “strategic“ agricultural export commodity from India and has consequently remained subject to a wide range of government interventions. Basmati rice is exported from India to many countries, especially to the Gulf and European countries. A steady increase in Bbasmati rice production, availability of buffer stocks, and growing demand for basmati rice in the international market made India a vital rice exporting country of the world. The present study explored the structural changes in basmati rice exports from India from 1991 to 2020. The stability in the importing partners of basmati rice from India was analyzed using first-order Markov chain analysis. The compound annual growth rate for the export quantity of basmati rice varied from 5.74 to 12.65 percent per annum. In contrast, the export value of basmati rice ranged between 4.40 to 21.06 percent per annum during the three selected decades. Further, the basmati rice export value showed higher instability than export quantity. Saudi Arabia, Iran, and the United Arab Emirates served to be the stable importers. In contrast, the United States and the United Kingdom served as the most unstable markets for Indian basmati rice according to the transitional probability matrix. Therefore, to reduce variability in exports of basmati rice, India should maintain long-term stable trading partners further to increase the export earnings.