Under-invoiced Indian rice exports come under Customs officials’ scrutiny

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Chennai region customs authorities have begun examining white rice exports shipped at less than $300 per ton in light of alleged invoices.

These shipments were especially made after September 9, 2022, when the government imposed a 20 percent export duty on white rice and blocked shipments of broken rice.

A large part of the exports sailed from the ports of Chennai or Tuticorin. Similar shipments were sent from Jawaharlal Nehru Port Trust, Mumbai, and Mundra Port, Gujarat.

major destinations

The drop in bills has come at a time when southern states, particularly Tamil Nadu and Karnataka, are facing shortages in the supply of subsidized rice through the Public Distribution System.

data available for Business line It showed that at least 2.63 thousand tons of white rice had been shipped at less than $300 a ton until May 10 this year.

Of the 2.63 thousand tons, most of the shipments were headed to Sri Lanka, Madagascar, Singapore and an unknown destination. Trade sources said there was “clear under bills” as Indian rice prices were set above $350 during the period. This is about 1.5 percent of the 17 million tons of non-basmati rice produced annually.

The Chennai customs official, when approached about the reduced bills, said he was asked to investigate the issue. On October 11, 2020, Business line mentioned That white rice exports were not billed sufficiently to overcome the impact of tariffs.

Money laundering allegations

Commercial sources claim that non-reduced billing was done to facilitate “hawala” transactions, particularly shipments to destinations where money can be easily laundered.

“Had the customs officials worked on the export price backwards, they would have found it undervalued,” said a trade source, who requested anonymity.

In one such export, a trader tried to find out who was the importer and found that there was no such company at the given address in Singapore.

There could also be national security issues under the rice export bills. Also, when some countries move from one pillar to another in search of rice supply through ration shops, the trade source said, some exporters charge less than $300 per ton.

Generic brands are shipped

Unbilled shipments defeat the goal of curbing exports to ensure the country’s food security. Moreover, it led to losses for the treasury as well, according to the sources.

“The circumvention of export duties on white rice by exporters traveling at night is a case study of the ineffectiveness of export supply restriction,” the trade source said.

Such exports “affected the quality and image of rice of Indian origin”, and in some cases the bags stated that the shipments were “the best good rice” without defining it as white or parboiled rice, which is duty-free.

Trade sources said that some of the bags bore signs in foreign languages ​​such as Bahasa or Thai, and they also bore generic brand names such as “Cycle”, “Apple”, “Bullet” and “3 Roses”.

Why restrictions on exports

Trade sources said that these exports support the government’s position to impose a comprehensive ban or allocate a shipping quota. They said these shipments call for the adoption of political measures to meet government policy goals.

On September 9, 2002, the center stopped rice exports because it feared that Kharif production would be affected by lack of rain in the main cultivation areas in the eastern parts. However, the Ministry of Agriculture projected a record rice production of 135.5 metric tons in its third advance estimate.

Data from the Export Development Authority of Agricultural Products and Processed Foods shows an increase in non-basmati rice exports in the fiscal year 2022-23 to 17.78 million tons, at a value of $6.35 billion, compared to 17.26 million tons, at a value of 6.12 million tons.