Confusion over duty calculations hampers Indian parboiled rice exports, claims dealers


Published on: March 7, 2024.

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Indian Traders Face Challenges with New Export Duty Calculation Method

Indian traders in the rice industry are experiencing difficulties in signing new contracts for parboiled rice exports due to changes in the calculation method for export duty. The new method, which requires a 20% duty on the transactional value rather than the Free on Board (FOB) value, has resulted in higher costs for exporters. As a result, the price of parboiled rice has soared, impacting the competitiveness of Indian exporters.

The imposition of a 20% duty on parboiled rice exports was introduced in August as a measure to control domestic rice prices in preparation for state and national elections in 2024. However, the new duty calculation has caused confusion and raised concerns among exporters. Krishna Rao, president of the Rice Exporters Association, has highlighted the need for clarification from the government on this matter.

Currently, exporters are offering the 5% broken parboiled variety at around $450, excluding duty. However, with the duty included, the price has reached a record high of $560, resulting in a customs duty of over 24%. This increase in price has impacted the demand for Indian parboiled rice, causing a slowdown in exports. Nonetheless, traders continue to ship around 500,000 metric tons per month as prices have risen in competing countries such as Thailand, Vietnam, Pakistan, and Myanmar.

Exporters have faced additional challenges as they were required to pay higher duty for already signed contracts due to the new duty calculation method. Buyers were unwilling to pay the difference, which ultimately had to be covered by the sellers. Efforts are being made to convince buyers to accept the higher prices for new contracts, but resistance remains.

India predominantly exports parboiled rice to African countries including Benin, Djibouti, Guinea, Liberia, and Togo. To address the confusion and challenges faced by both buyers and sellers, some industry experts suggest the implementation of a flat duty of approximately $100 per ton on parboiled rice exports.

In order to continue supporting the rice industry in India, it is crucial for the government to offer clear guidance and establish a fair and consistent export duty calculation method that will benefit both exporters and buyers.

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