India’s rice export curbs trap 1 million tons at ports as buyers refuse to pay duty.

India’s rice export curbs trap 1 million tons at ports as buyers refuse to pay duty.

With the new tax on rice exports and the ban on the export of broken rice by the Government of India, the potential buyers are refusing to pay this 20% increase in the export duty of various types of rice exported from India. This new law has led to the stoppage of rice loading at the ports, and nearly one million tons of grains are lying there unescorted.

INDIA’S RICE EXPORTS AND ITS PRODUCTION

No doubt rice is the most important crop in the world.

India, being the second largest rice-producing country in the world and the leading exporter of the same, exports nearly 20 million tons each year and contributes roughly 6.2 % of the BIN GDP.

Also, Indian rice production saw a significant rise to 130.29 million tons in 2021-22 compared to previous years.

The following Indian states have the highest areas of Basmati rice under production as such Jammu and Kashmir, Himachal Pradesh, Haryana, Punjab, Delhi, Uttarakhand, and the Western side of Uttar Pradesh.

Also, being the leading exporter of Basmati rice to the global market, it accounts for over 70% of the total global basmati rice market.

As of 2021-2022, India has an enormous volume of rice exported, estimated at 18.75 million metric tons, followed by Vietnam.

As per the statistics, it is also said that in the upcoming time, India’s rice exports, as projected, will surpass the combined shipment of the following three biggest rice exporters- Vietnam, Thailand, and Pakistan.

Every month, nearly two million tons of rice are exported from India to the rest of the world. The leading importers of the same are Nepal, Benin, Senegal, Bangladesh, and Guinea.

India has dominance over 40 percent share in the global rice trade. It grew about 109% in rice exports from FY 2013-14 to FY 2021-22. 

Our non- basmati export is around USD 380-400 per ton, which is way lower than other countries’ exports.

India is also the largest consumer of rice after China, having a market share of around 40% of the global market rice trade.

INDIA’S NEW RICE EXPORT LAW

After observing the below-average monsoon and rainfall curtailed planting this year, the Government imposed a ban on the export of broken rice. Also, it levied a 20% heavy-duty on exporting various kinds of rice and other grains. However, the Government imposed this restriction to boost local supplies and to maintain fair and stable prices. The law came into effect on September 09, 2022.

Another reason for imposing the restrictions by the Government was the uptick in the price of domestic wholesale and retail sales of rice.

As for the parboiled rice, the Government made no policy.

RESULTS

The new India’s rice export laws did not result as expected, leading to about 75000 tons of white rice and about 35000 tons of broken rice lying unattended at the ports and docks.

As experts say, this new imposition of a high tax on non-broken rice and a ban on the export of broken rice will drastically affect India’s rice exports.

India’s rice, which should be at a different place right now, is curbing at docks, causing price hikes in many Asian and non-Asian countries.

B.V. Krishna Rao, All India Rice Exporters Association (AIREA) ‘s president, said,” The duty became effective from midnight, but buyers are not ready to pay the tax.” “We have stopped loading vessels.”

With this new law of India’s rice exports, the buyers and sellers were utterly baffled, not knowing what to do.

As Himanshu Aggarwal, the executive director at Satyam Balajee Rice Industry Private Limited, said,” Margins are wafer-thin in the rice business and exporters can’t afford to pay 20% duty. So the Government should allow exports against already issued LCs,”.  

Following this, the Government has granted permission to load the already handed over consignment to the customers. However, the loading must be completed before September 15.

The following criteria do not match with at least 35000 tons of broken rice lying at the port, and moving the cargo back is not possible and is very cumbersome.

The exporters informed that the stuck, broken rice shipments were headed toward China, Senegal, and Djibouti. On the other hand, buyers from Benin, Sri Lanka, Turkey, and United Arab Emirates brought different grades of white rice.

The AIREA, in this matter, has demanded that the Government relax the new India’s rice export rules for transitional cargoes totalling 75000 tons of white rice and 50000 tons of broken rice.

Indian rice exports will surely face drastic changes in the upcoming time.

Edited by Prakriti Arora