In yet another effort to maintain adequate stock and to keep domestic prices under check, the government has imposed a 20 per cent export duty on parboiled rice. The Finance Ministry notification dated August 25, said that the export duty will be effective October 16, 2023. With his curb, the Centre has imposed restrictions on all varieties of non-basmati rice.
Notably, the finance ministry notification said that parboiled rice lying in customs ports that have not been granted LEO (let export order) and are backed by valid LCs (Letter of Credit) before August 25, 2023, will be exempted from the new export duty.
Non-basmati white rice constitutes about 25 per cent of the total rice exported from the country, according to a PTI report.
The latest move will be seen in the continuation of a ban on the export of non-basmati white rice in July 2023 to stabilise the domestic rice market. To further regulate prices, Food Secretary Sanjeev Chopra earlier announced the release of an additional stock of 2 lakh metric tonnes (LMT) of rice into the market.
In a similar measure, the government recently introduced a 40 per cent export duty on onions. This move is intended to boost the availability of onions within the country.
Data from the first quarter of the fiscal year 2023-24 indicate a significant increase in non-basmati white rice exports, surging to 15.54 lakh tonnes, the report said. This marks a notable rise compared to the 11.55 lakh tonnes recorded during the same period last year.
The decision to impose export restrictions stems from concerns about the upward trajectory of prices for this essential food commodity. Measures have coincided with a rise in retail or consumer price inflation in India. In July, inflation reached a 15-month high of 7.44 per cent, a substantial increase from June’s figure of 4.87 per cent. The primary driver behind this inflation has been the surge in food prices.
The Finance Ministry’s Monthly Economic Review noted that in July, cereals, pulses, and vegetables exhibited double-digit growth compared to the corresponding period last year.
Meanwhile, data from the Ministry of Agriculture show that India’s rice production reached 135.54 million tonnes in the 2022-23 crop year (July-June), rising compared to the 129.47 million tonnes produced in the previous year.
Rice Price Rising Globally
According to a Reuters report, India imposing a 20 per cent duty on exports of parboiled rice with immediate effect could further reduce shipments from the world’s largest exporter and lift global rice prices, which are already trading near their highest levels in 12 years.
India holds a significant share of over 40 per cent in global rice exports. With limited inventories among other exporters, any reduction in shipments could lead to inflation in food prices, reports suggest. This situation has been exacerbated by various factors including Russia’s invasion of Ukraine in the past year and unpredictable weather patterns.
Notably, in July, the rice price index of the United Nations Food Agency surged to its highest level in nearly 12 years. This increase was fueled by rising prices in key exporting nations due to strong demand after India’s imposition of export restrictions. Thai white rice 5 per cent broken, which serves as an Asian benchmark, has risen to $648 per tonne, a 15-year high, as per an earlier Bloomberg report.
As of now, India has placed restrictions on all categories of non-basmati rice, which are typically favored by consumers in Africa and Asia. The government had previously extended a ban on wheat exports after implementing limitations on rice shipments in September 2022. Additionally, this year, exports of sugar were capped due to decreased cane production.