India’s Rice Exports Jeopardized as Exporters Confront Massive Tax Demand, Say Sources
Published on: March 26, 2024.
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Indian rice exporters are facing a significant challenge as they have received notices from the customs department demanding payment of duty differentials on rice exported in the last 18 months. This rare tax demand has the potential to severely impact rice shipments from India. The world’s largest rice exporter implemented a 20% export duty on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023 in an effort to control domestic rice prices ahead of key state and national elections in 2024.
Previously, exporters were required to pay a 20% duty based on the Free on Board (FOB) value of rice. However, the customs department now mandates that exporters consider the transaction value and pay any resulting duty difference. Exporters are faced with the daunting task of paying the duty difference for nearly two years, which many believe is financially unfeasible. This unexpected demand puts exporters in a difficult position as overseas buyers are unlikely to pay the additional duty, making it challenging for exporters to meet the government’s requirements.
The finance ministry and Central Board of Indirect Taxes and Customs have yet to comment on the matter. As per the government’s new calculations, exporters would be required to pay an additional duty of approximately $15 per metric ton on rice exported in the past two years. Industry estimates suggest that the total cost of this additional duty amounts to around 15 billion rupees.
In response to this burden, the Rice Exporters Association plans to engage with the government to voice their concerns and propose a flat duty on future exports to avoid similar confusion and financial strain. Rice exports already operate on slim profit margins, and this unexpected tax demand has led exporters to consider taking legal action rather than paying the additional duty.
India primarily exports non-basmati rice to countries such as China, Bangladesh, and various African nations, including Benin, Djibouti, Guinea, Liberia, and Togo.
Source: [Economic Times](https://m.economictimes.com)
