India Contemplates Extending Parboiled Rice Tax, Posing Global Supply Concerns


Published on: February 14, 2024.

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India, the world’s leading rice exporter, is considering extending the export tax on parboiled rice in order to address rising food inflation before the upcoming national elections. This potential decision could contribute to higher global rice prices and tighter supply.

Prime Minister Narendra Modi’s government, which is seeking a third term in the elections scheduled for the first half of this year, is contemplating keeping the export levy at 20%, sources familiar with the matter revealed. While there are no immediate plans to ban parboiled rice exports, discussions on maintaining the tax beyond its current expiration date of March 31 are ongoing.

If implemented, this move may result in further increase in benchmark Asian rice prices, which are currently near a 15-year high due to India’s restrictions on the export of certain rice varieties since 2023. Consequently, this development could negatively impact countries in West Africa and the Middle East, as they heavily rely on India for their rice requirements.

Representatives from both the food and commerce ministries declined to comment at this time.

Extending the export tax on parboiled rice aligns with the Indian government’s aggressive measures to manage food inflation, which reached nearly 10% in December 2022 compared to the previous year. India has already imposed limitations on the export of wheat, sugar, and most rice varieties, as well as implemented measures against hoarding. Additionally, low import duties on edible oil have been extended for another year.

Despite these efforts, retail rice prices in Delhi remain around 11% higher than last year. To address this issue, Food Minister Piyush Goyal launched a subsidized rice program on Tuesday, aiming to provide affordable rice to retail customers nationwide. The government is already selling wheat flour and chickpeas at prices lower than the market rate.

Parboiled rice, which constituted approximately 30% of India’s total rice exports prior to the restrictions, undergoes a process involving partial boiling of paddy before milling to enhance its nutritional value and alter the texture of cooked rice. In 2022-23, India had a 40% share in the global rice trade.

Source: [TBS News](https://www.tbsnews.net)