The government has announced a five per cent subsidy on the export of non-basmati rice for the next four months as a steep hike in the minimum support price has made the commodity uncompetitive.

The incentive will be in force till March 25, 2019, the director general of trade policy said in an order.

“Non-basmati rice items have been made eligible for MEIS benefit at the rate of 5 per cent for exports,” it said.

The products include husked (brown) rice, parboiled and broken rice.

The Merchandise Exports from India Scheme (MEIS) involves duty credit scrips, which are freely transferable and can be used for the payment of customs duty.

In April-September this year, India exported just 5.8 million tonnes (mt) of rice worth $3.8 billion, trade data showed.

Non-basmati shipments dropped 13 per cent in April-September to 37.23 lakh tonnes, while basmati rice exports fell 2.4 per cent to 20.82 lakh tonnes. However, because of better realisations, basmati exports were higher in value terms by 6 per cent at $2.25 billion, while the non-basmati variety was down 12 per cent.

Traders said the steep hike in minimum support price had affected their export competitiveness from countries such as Thailand, Vietnam and Myanmar.

“We had sought a 10 per cent relief from the government for the exports to be competitive. The government has provided 5 per cent, which would help in competing in the global market. With this incentive, we hope to at least meet last year’s export level,” B. V. Krishna Rao, president of All India Rice Exporters’ Association, told The Telegraph.

The government in July this year increased the paddy MSP by 13 per cent to Rs 1,750 per quintal, the biggest hike in six years.