India's aggressive rice exports have come to a virtual halt in recent weeks amid growing fears of default on sales contracts, traders said on Thursday.

Exporters say no new export orders were being booked as they were facing hurdles in fulfilling existing contracts because of a shortage of rail wagons to move the grain to the ports.

"Delays and defaults are happening," said Sudip Basu, of diversified group ITC Ltd. "Nobody is recognising the problems and at the operational level nothing is moving."

"There is no interest in fresh sales and with the increase in rice export prices, there is no great demand."

India has been aggressive in its rice sales this year, mainly to Southeast Asia, the Middle East and Africa. It is emerging as the world's second-largest rice exporter after Thailand, edging Vietnam to third place.

But sales have been hit with the government in November increasing the price of rice sold to the exporters and the railways slashing the number of trains allotted to traders to move the grain from warehouses to the ports.

State-run Food Corporation of India, which sells grain to traders at subsidised rates, in November hiked the export price of raw rice from the new crop by Rs 600 a tonne to Rs 6,510, while the price of parboiled rice was fixed at Rs 6,865 a tonne.

It also increased the price of raw rice from the previous crop by Rs 350 a tonne to Rs 6,260 from January 1.

Hurdles

Exporters said buyers in India's traditional markets in Southeast Asia and Africa were picking up rice from Pakistan and Vietnam as they were sure of prompt deliveries.

"Thai and Vietnamese rice is $10 more expensive than Indian rice while Pakistan rice prices are almost the same, but all these get nullified because of transport bottlenecks," said S S Kumar, vice president of L T Overseas, leading grain exporters.

Kumar said hardly any orders were booked in January but things should start looking up from March by when more railway rakes should be available.

Traders said the railways were not allotting enough wagons to move rice to the ports because they were being used to dispatch grains locally following complaints of shortages in many parts.

The demand for the grain is high in the winter months between December and February, Kumar said, adding the offtake from government stocks for supply to poor people at subsidised rates would slow down from March, freeing up rail wagons.

"Many exporters, who had paid money to the FCI in October, are getting rakes (trains) now," said one trader. He estimated that shipments of 150,000 to 200,000 tonnes of rice should be pending.

Traders expect the country's rice exports in the year to March 2003 to be around 4.5 million tonnes.