Indian Rice Traders Increase Prices to Reflect Surge in Export Duty
Published on: March 28, 2024.
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India’s Rice Export Prices Rise on Higher Duty, Lacklustre Demand
In recent news, India’s rice export prices have seen an increase as traders have factored in higher duty on rice shipments. At the same time, demand for rice in Thailand has remained lacklustre. The 5% broken parboiled variety of rice in India was quoted at $550-$558 per ton this week, marking a rise from last week’s prices of $543-$550. It is worth mentioning that prices had reached a record high of $560 earlier this month.
The increase in prices can be attributed to the government’s consideration of the total transaction value instead of Free on Board (FOB) value to calculate the 20% export duty. This change has led to higher export prices for rice. A dealer with a global trade house based in New Delhi explained, “We’ve had to raise prices since the government is considering the total transaction value instead of Free on Board (FOB) value to calculate the 20% export duty. This has pushed our export prices higher.”
To control domestic rice prices, the Indian government imposed a 20% export duty on parboiled rice exports in August 2023. However, this move has resulted in exporters receiving notices from the customs department, demanding payment of duty differentials on rice exported in the last 18 months. This tax demand is rare and has the potential to cripple rice shipments from India.
In contrast, Thailand has seen a decrease in rice prices. The 5% broken rice in Thailand was quoted at $585-$590 per ton this week, down from last week’s prices of $598. This decline can be attributed to a weakening baht and subdued demand. Despite this, Indonesian buyers have supported the prices.
Vietnam’s rice prices have remained stable, with the 5% broken rice offered at $590-$595 per metric ton, unchanged from a week ago. However, exporters in Vietnam have slowed down their purchases from farmers due to a forecast from the U.S. that the Philippines may reduce its rice imports this year. This forecast is based on rising domestic supplies in the Philippines, which is Vietnam’s largest rice export market.
Meanwhile, Bangladesh’s rice prices have remained elevated despite good yield and reserves. As a result, officials are considering allowing private traders to import up to 200,000 tonnes of rice in an attempt to lower domestic prices.
In conclusion, India’s rice export prices have risen due to higher duty, while demand in Thailand remains lacklustre. On the other hand, Vietnam’s prices have remained stable, but exporters have slowed down purchases due to uncertainties in the Philippines market. Bangladesh, despite good yield and reserves, is considering importing rice to cool down domestic prices.
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