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Tuesday / November 29. 2022

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HomeAgroPolicyGovt intervention in rice exports: A bane or boon?

Govt intervention in rice exports: A bane or boon?

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As a temporary measure, in September, 2022, India banned export of broken rice and imposed a 20 per cent export duty on non-Basmati rice except for parboiled rice to boost domestic supplies amid a fall in area under paddy crop in the current kharif season. AgroSpectrum spoke to the industry leaders on pros and cons of this action, which the government has undertaken for food security concerns of the country keeping in line with the achievement of SDGs (Goal 2: Zero hunger).

The area under the paddy crop has been dropping steadily over the last few years due to factors such as loss of soil fertility and water scarcity. To counter the decrease in output, because of this during the current kharif season and ensure sufficient domestic supplies, India has banned the export of broken rice and imposed a 20 per cent duty on the export of non-Basmati rice, other than parboiled rice. There are four main types of rice that are sold internationally. Free and unrestricted export of Basmati rice and parboiled non-Basmati rice continues to this day. These restrictions only apply to uncooked (white) and broken varieties of rice that aren’t Basmati.

From what we can gather from official sources, the recent changes in India’s rice-export rules has helped to keep domestic prices stable without impacting the country’s ability to ship the commodity overseas. The alterations were made to assist the animal husbandry and poultry sectors by lowering the cost of animal feed, which has an impact on the price of milk, meat, and eggs.

This is also an effort to support the ethanol-blending programme, which helps to cut down on expensive oil imports. However, it is still a big question whether this move is going to achieve the desired impact. India is a major exporter of rice to many countries and it could easily affect its leading position, paving the way for other countries such as the US, Pakistan, and Thailand to grab top spot. Some media reports suggest that the export duty on non-Basmati rice and the ban on broken rice could reduce India’s rice exports by 4.5-5 million tonnes this fiscal year. Another drawback of imposing a 20 per cent duty on export is that Indian rice shipments will become uncompetitive in the world market.

As per the data of Directorate General of Commercial Intelligence & Statistics (DGCIS), India exported rice to over 150 countries across the globe in 2021-22. India exported rice worth more than $1 million to 76 countries out of the 150 countries reported in 2021-22, which indicates the diversification of India’s rice export over the years. India had exported non-Basmati rice worth $2015 million in 2019-20, which rose to $4799 million in 2020-21 and $6115 million in 2021-22. Registering a growth of 27 per cent in 2021-22, export of non-Basmati rice was the top forex earner among all agri-commodities, at $6115 million.

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