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March 12, 1998


The Rediff Business Special: Shantanu Guha Ray

The stealing of basmati

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"The devil," declared a tensed exporter, "was smiling in our hearts when the party was going on." The portly businessman, who operates out of the Indian capital, was talking about New Delhi's initial success in checkmating American rice exporters in the international market last year through a game plan decided by outgoing finance minister P Chidambaram and the then Commerce Secretary Tejinder Khanna.

Chidambaram had found that United States exporters dominated the international bazaar with a World Trade Organisation regulation that higher the price of a commodity, the lower the duty. And that Washington followed the strategy to sell rice at $530 a tonne in the European market primarily to fight the Vietnamese, who wee selling rice at $450 in the highest price market.

New Delhi pegged Indian basmati rice at $780 a tonne, which was $250 higher than the referring price in the European Union. And as a result of lobbying, Indian exporters managed to wrest a 250 Ecu (European Currency Unit, at that time equivalent to $1.32) duty derogation. Islamabad followed suit and was allowed a similar concession for exports up to 10,000 tones and 50 Ecu.

"And even before the celebrations were over, the trouble started... The World Trade Organisation got a complaint from the US and later from Canada and Thailand that the concession violated the most favoured nation requirement because similar aromatic rice had not been given the same concession," said the exporter. "A week later, the US changed the complaint to say basmati rice from the US was being discriminated against."

When the Texas-based RiceTec announced its intention to license a patented variety of basmati in the May 1997 issue of Rice World Journal (circulated to all rice producing nations), it took the mandarins of the agriculture ministry by surprise. After all, New Delhi's answer to such development, the Basmati Protection and Development Fund, was set up only around that time. And since then, the body has been marred by infighting among exporters who have often disagreed over a host of issues of national interest.

The simmering controversy over the vexed issue of geographic appellation of export of high-quality basmati rice grown in India is likely to be a long drawn legal affair in the courts of London and the United States, which may well be New Delhi's summer of despair.

Experts are likening it to a development that jolted the 810 million kilogram tea industry. The government discovered that Kenyan, Sri Lankan, and Indonesian planters were selling their brand of tea as "Darjeeling tea grown in Nairobi and Sir Lanka ."

Last week, even as RiceTec picked up the patent for basmati, the ministry of agriculture, its affiliate Agriculture and Processed Food Products Export Development Authority and All-India Rice Exporters Association were caught groping in the dark for having passively allowed an American company label American rice as basmati illegally.

"This disaster could have been averted if damage control measures were taken well in advance and its not that the government was unaware. Instances of geographic appellation like champagne only from Champagne district in France, Colombian coffee from no other place than Colombia, Havana cigars only from Cuba, and Scotch whisky exclusively from Scotland, are galore. So particular was Scotland about its liquor that it said (in its worldwide publicity campaign) that the nation's air and water had something unique that helped Scotch become such a class drink. But India obviously doesn't believe in such a thing as brand development and awareness," said an exporter.

Rightly so. Sources said there is increased rivalry in the Rice Exporters' Association. One group is headed by R S Seshadri of United Riceland, having strong connections with Tilda Rice, the largest London-based export house owned by the Thakrals which send consignments all over England, the United States and to a number of West Asian countries. The other group has members like Gurnam Arora of Satnam Overseas, the country's largest rice exporter, Anil Chandna of Amira Exports, and Sandip Singh Kochar of Misha Exports.

Last year, an application for a few million dollars for creating international awareness about basmati was sent by the Basmati Protection and Development Fund to the Brand Equity Fund of India, set up by Chidambaram. The plea was rejected and the BPFD was told to raise its own resources (by charging a cess of Rs 20 per tonne exported) for such purposes.

Nevertheless, BPDF and Agriculture and Processed Food Products Export Development Authority (APEDA) jointly called for an advertising agency pitch that drew the best of the nation ranging from the Hindustan Thompson Associates, Ammirati Puris, Lintas, McCann Erickson, Rediffusion DY&R, and R K Swamy BBDO. A month later, Rediffusion was recruited. The result? While senior officials of the agency refused to comment, sources said that it does not have a brief to work on till date.

"We are confident of getting the patent back and are working towards that... and our campaigns will start soon," said APEDA chairman D Rajagopalan, admitting that precious time will indeed be lost in fighting the case with RiceTec. "And in the process, the American company could benefit," he lamented.

Agreed Anil Adlakha, secretary general of AIREA : "Some time is definitely lost but we are confident that we will be able to regain the patent and the American company will have to sell its old brands." The three law firms hired by the government -- Sagar and Suri Associates in India, Linklaters, and Patten and Bogs in London -- are reportedly working out the modalities of filing the complaint with the US government and the WTO.

Naresh Chandra, the Indian ambassador to the United States, has also sent a team to deliberate with RiceTec. The company, which reportedly expressed surprise over the furore and New Delhi's decision to appeal the US patent ruling, said it will argue on the issue of basmati as a class of rice and not to a brand name.

What does the RiceTec patent mean for India? The patent, granted more than five months ago, allows RiceTec to sell rice under the brand name basmati. The company, which had been earlier selling rice under brand names Kasmati and Texmati, will now be able to label its aromatic rice Basmati not only for sale within the United States but also for exports.

"This is an unmitigated disaster. The government should have been careful. The US cannot grant patent for a rice that is traditionally grown in India and Pakistan. This is gross violation of the geographical indication clause of the Trade-Related Intellectual Property Rights (TRIPS)," remarked patent expert Suman Sahai.

According to her, not only will India lose out on the 45,000-tonne US market, which forms ten per cent of the total basmati exports, but also its premium position in vital markets like the European Union, the UK and West Asia.

Exports of basmati are less than half a million tonnes while that of non-basmati rice is four times the figure. And unlike the latter category, whose exports have shot up from 260,000 tonnes 1992-93 to touch a high of 5.1 million tonnes in 1995-96, before slipping to 1.98 million tonnes in 1997, basmati has grown by just around 150,000 tonnes.

"The must crucial factor is that the export of 488,700 tonnes in 1996-97 fetched the exchequer a whopping Rs 11.96 billion," said Sahai.

Agreed Dr Vandana Shiva, who heads a Delhi-based research foundation which monitors issues involving patents and biopiracy. She felt that the RiceTec claim was basically to fool the consumer that there's no difference between spurious Basmati and real basmati.

"The theft involved in the basmati patent is, therefore, threefold: a theft of the collective intellectual and biodiversity heritage of Indian farmers, a theft from Indian traders and exporters whose markets are being stolen by RiceTec, and finally, a deception of consumers since RiceTec is using the stolen name Basmati for rice which are derived from Indian rice but not grown in India, and hence are not of the same quality," she said.

Kind Courtesy: Sunday


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