India lifts all curbs on rice exports, scraps 10% export duty on parboiled rice, $490 floor price for white rice

The Indian government on Wednesday removed all curbs on rice exports that have been in force since September 2022. However, it has retained the ban on exports of broken rice.

Within hours of lowering the Customs duty on parboiled rice to zero from 10 per cent, it scrapped the $490 per tonne minimum export price (MEP) on white rice. On October 18, businessline reported that the Government had decided to ease export curbs on rice further following a decision at a high-level inter-ministerial meeting.

“We welcome the government’s decision to remove the curbs on export of white and parboiled rice. This will benefit exporters to get additional 1% Roadtep, drawback and GST refunds. which we were not able to avail of during the ban. This will boost exports and shipments will top 22 million tonnes by March 2025,” said Rajesh Paharia Jain, a New Delhi-based exporter.

M Madan Prakash, Presdient of Agricultural Commodities Exporters Association, welcomed the decision, saying it was a big relief.

The move is also seen as a way to ease the problem of warehouses in Haryana and Punjab overflowing with rice stocks. Union Food Minister Pralhad Joshi told the media on Wednesday that the Centre has accorded top priority to evacuate the stocks from these States.

The Commerce Minister, in a notification on Wednesday, said the requirement of MEP has been lifted with immediate effect. Late on Tuesday, the Finance Ministry lowered Custom Duty to NIL from 10 per cent on parboiled rice, husked (brown) rice and rice in the husk (paddy or roughy). It has been made effective from October 22.

The decisions have been taken at a time when a model code of conduct is in place because of polling in two States – Maharashtra and Jharkhand. However, the decision has been taken fulfilling all the pre-requirements. “May kindly note that Election Commission has given clearance to issue the notification subject to the condition that no political mileage is derived out of the same by anyone anywhere,” an official said.

This is the second move to ease exports within a month. Earlier on September 26, the Ministry cut the export duty on non-basmati parboiled rice, husked (brown) rice and rice in the husk (paddy or rough) to 10 per cent from 20 per cent with immediate effect. Also, semi-milled or wholly-milled rice, whether or not polished or glazed (other than parboiled rice and Basmati rice) allowed duty-free.

It, however, fixed a MEP of $490/tonne on white rice exports. However, exporters complained that their shipments were being held up at ports with the Customs authorities checking if parboiled rice was being shipped out as white rice. The hold-up at ports for over a week was forcing them to incur additional costs, exporters said.

India began to curb rice exports in September 2022 when it banned shipments of broken rice. It then imposed a 20 per cent export duty on white rice. These measures were taken as part of the government’s efforts to tackle food inflation and deficient rainfall in key paddy-growign areas of eastern India.

In July 2023, the Centre banned the export of white rice and imposed a 20 per cent export duty on parboiled rice. The government, however, made it clear that it will allow exports on a government-to-government basis besides countries, including its neighbours, that face food security issues.

The measures were taken after El Nino emerged affecting production in some of the key States such as Andhra Pradesh and Karnataka among others.

Despite El Nino affecting a fourth of the country, rice production was estimated at a record 137.83 million tonnes by the Ministry of Agriculture last week. It is higher than the 135.76 million tonnes produced in 2022-23.

The ban resulted in India’s non-basmati rice exports dropping to 11.12 million tonnes in the 2023-24 fiscal compared with 17.79 million tonnes in 2022-23. This year, the kharif area under rice has increased higher than the normal 401.55 lakh hectares to 409.5 lakh hectares. However, excess rains in some of the growing areas such as Telangana, Andhra Pradesh, Jharkhand and southern West Bengal have raised concerns over the conditions of paddy crop.

India’s ban resulted in prices of rice increasing in the global market to nearly $600 a tonne. Thailand, Vietnam and Pakistan gained due to India’s rice export curbs. With India easing export curbs, rice prices have dropped below $575 a tonne, except from the US.