Global Rice News

A Change of Course for India’s Rice Exportation Policy

Rice exporters in India are calling for the government to introduce a flat export duty of $80 per tonne on parboiled rice, replacing the current 20% duty. This is a calculated move, aimed at simplifying trade and minimizing uncertainties within the rice exportation sector, according to the Indian Rice Exporters Federation (IREF), a leading organization for rice exporters.

The IREF is also appealing to the government to reconsider its decision to ban the export of white rice, which was put into effect in July. Additionally, the organization is urging the government to reduce the minimum export price for basmati rice to $850 per tonne, with an objective to curb the adverse effects on export volumes and rice farmers.

Government Reaction

Last Friday, the Indian government extended the 20% export duty on parboiled rice until March 24. National President of IREF, Prem Garg, has been emphasizing the necessity for a switch from a percentage-based duty to a fixed $80 per tonne duty for clearer trade practices.

The federation expresses keen interest in collaborating with the government concerning the ban on white rice. It is also expectant of a formal announcement regarding a lowered minimum export price of basmati rice, at $850 per tonne, down from the current price of $1,200 per tonne. It is crucial to mention that India’s annual non-basmati rice exports surpass Rs 50,000 crore.

Implementation and Effects of Export Restrictions

The Indian government has set these export curbs in place to ensure a sufficient stock of rice and to control food inflation. However, Garg pointed out that these restrictions have caused a 30% surge in international rice prices, essentially benefiting competing countries such as Pakistan and Thailand.

According to Sanjeev Ahuja, the Director General of IREF, India holds the title of the world’s largest rice exporter. It accounts for nearly 46% of global rice exports, which translates to around 22 million tonnes on an annual basis. Regrettably, only 6.9 million tonnes have been exported thus far.

The 22 million tonnes break down into 5 million tonnes of basmati rice, while the remainder is comprised of white and parboiled rice. IREF anticipates that the current governmental restrictions will bring about a negative influence on export volumes for this year.

Farmers Face Pressure Amid Export Restrictions

Garg highlighted that rice farmers are experiencing tension due to the decrease in demand from rice exporters from Pakistan. The Bharatiya Kisan Sangh criticized the timing of the export ban announcement, asserting that it sends a discouraging message to farmers during this planting season.

IREF, although recently established, boasts a staggering 4,000 members and effectively resolved an issue related to the exportation of white rice by coordinating clearance of 90,000 tonnes that were en-route to export destinations at the time the ban was announced.