A 20% rice export duty was imposed by India on the second week of September as a measure to increase supplies and reduce local costs after a below-average monsoon rains hampered growth.
As the world’s largest rice exporter, the country supplies to over 150 countries globally.
According to Reuters, any decline in India’s rice shipments will exacerbate the upward pressure on food prices that are already soaring due to drought, heat waves, and Russia’s invasion of Ukraine.
The new rice export duty is likely to dissuade buyers from purchasing from India and cause them to shift towards other rice exporters like Thailand and Vietnam, which have struggled to increase their shipments and raise prices.
However, the Indian government has exempted parboiled and basmati rice from the export duty that will be enforced from Sept 9 onwards.
According to BV Krishna Rao, president of the All India Rice Exporters Association, the tariff will affect white and brown rice, which accounts for more than 60% of India’s exports.
Rao stated that the rice export duty will render Indian rice shipments to be uncompetitive on the global market as buyers will turn to Thailand and Vietnam for their supplies.
India makes up over 40% of the global rice exports and is the rival to Thailand, Vietnam, Pakistan, and Myanmar in global markets.
Significant rice-producing states in India, such as West Bengal, Bihar, and Uttar Pradesh, have received below-average rainfall, causing concern for the country’s rice output. This year, the country has already prohibited wheat exports and curtailed sugar shipments.
According to Himanshu Agarwal, executive director of Satyam Balajee, India’s largest rice exporter, the overall exports would decline by at least 25% in the following months as a result of the levy.
Thus, the exporters are urging the Indian government to provide relief for the export contracts which have already been signed as well as for the vessels that are loading at the ports.
He said that buyers cannot pay a 20% premium over the agreed-upon price, and neither can sellers afford to pay the charge. Henceforth, he calls for exemption for the contracts that have already been signed.
In 2021, India’s rice exports reached a record 21.5 million tonnes, surpassing the combined exports of the world’s next four largest rice exporters: Thailand, Vietnam, Pakistan, and the US.
India has been the cheapest supplier of rice by a significant margin, and this has shielded African nations such as Nigeria, Benin, and Cameroon from a rise in wheat and corn prices, according to a Mumbai-based dealer with a global trading company.
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