Mumbai: India banned the export of broken rice and imposed a 20% duty on exports of various grades of rice on Thursday as the world’s largest grain exporter tries to boost supplies and calm local prices after below-average monsoon rains.
India export rice for more than 150 countries, and any reduction in its shipments would add upward pressure on food prices, which are already rising due to drought, heat waves and Russia’s invasion of Ukraine.
The new duty is likely to discourage buyers from buying from India and prompt them to shift to rivals Thailand and Vietnam, which are struggling to increase shipments and raise prices.
The government has exempted boiled and basmati rice from the export duty, which will be applicable from September 9.
New Delhi also banned the export of 100% broken rice, which some poor African countries import for human consumption, although that variety is mainly used for feed purposes.
All India Rice Exporters Association president BV Krishna Rao said the duty would affect white and brown rice, which account for over 60% of India’s exports.
“With this duty, shipments of Indian rice will become uncompetitive in the world market. Buyers will shift to Thailand and Vietnam,” Rao said.
India accounts for over 40% of global rice shipments and competes with Thailand, Vietnam, Pakistan and Myanmar in the world market.
Below average rainfall in major rice producing states like West Bengal, Bihar and Uttar Pradesh has raised concerns over India’s rice production. The country has already banned wheat exports and restricted sugar shipments this year.
Himanshu Agarwal, executive director of Satyam Balaji, India’s largest rice exporter, said Indian exports would fall by at least 25% in the coming months due to the duty.
Exporters want the government to provide some relief for export contracts that have already been signed, loading ships at ports.
“The buyers cannot pay 20% more than the agreed price and even the sellers cannot pay the levy. The government should exempt the already signed contracts from the levy,” Agarwal said.
India’s rice exports touched a record 21.5 million tonnes in 2021, more than the combined shipments of the world’s next four largest grain exporters: Thailand, Vietnam, Pakistan and the United States.
India has been the cheapest supplier of rice by a huge margin and this has saved African countries such as Nigeria, Benin and Cameroon from sharply slashing wheat and corn prices, said a Mumbai-based dealer of a global trading firm.
“Except rice, prices of all food crops were rising. Rice is now joining the rally,” he said.
He said the ban on shipments of broken rice could severely affect China’s fodder procurement.
China was the largest buyer of broken rice with purchases of 1.1 million tonnes in 2021, while African countries such as Senegal and Djibouti bought broken rice for human consumption.
India export rice for more than 150 countries, and any reduction in its shipments would add upward pressure on food prices, which are already rising due to drought, heat waves and Russia’s invasion of Ukraine.
The new duty is likely to discourage buyers from buying from India and prompt them to shift to rivals Thailand and Vietnam, which are struggling to increase shipments and raise prices.
The government has exempted boiled and basmati rice from the export duty, which will be applicable from September 9.
New Delhi also banned the export of 100% broken rice, which some poor African countries import for human consumption, although that variety is mainly used for feed purposes.
All India Rice Exporters Association president BV Krishna Rao said the duty would affect white and brown rice, which account for over 60% of India’s exports.
“With this duty, shipments of Indian rice will become uncompetitive in the world market. Buyers will shift to Thailand and Vietnam,” Rao said.
India accounts for over 40% of global rice shipments and competes with Thailand, Vietnam, Pakistan and Myanmar in the world market.
Below average rainfall in major rice producing states like West Bengal, Bihar and Uttar Pradesh has raised concerns over India’s rice production. The country has already banned wheat exports and restricted sugar shipments this year.
Himanshu Agarwal, executive director of Satyam Balaji, India’s largest rice exporter, said Indian exports would fall by at least 25% in the coming months due to the duty.
Exporters want the government to provide some relief for export contracts that have already been signed, loading ships at ports.
“The buyers cannot pay 20% more than the agreed price and even the sellers cannot pay the levy. The government should exempt the already signed contracts from the levy,” Agarwal said.
India’s rice exports touched a record 21.5 million tonnes in 2021, more than the combined shipments of the world’s next four largest grain exporters: Thailand, Vietnam, Pakistan and the United States.
India has been the cheapest supplier of rice by a huge margin and this has saved African countries such as Nigeria, Benin and Cameroon from sharply slashing wheat and corn prices, said a Mumbai-based dealer of a global trading firm.
“Except rice, prices of all food crops were rising. Rice is now joining the rally,” he said.
He said the ban on shipments of broken rice could severely affect China’s fodder procurement.
China was the largest buyer of broken rice with purchases of 1.1 million tonnes in 2021, while African countries such as Senegal and Djibouti bought broken rice for human consumption.