India Increases Export Restrictions With a 20% Levy On Parboiled Rice

An announcement from the finance ministry on Friday stated that India had levied a 20% export levy on parboiled rice. This step follows a previous ban on exporting broken rice and non-basmati white rice, which was issued in September 2022 and the month before, respectively, in response to the skyrocketing prices of this dietary staple.
The exporters who entered into contracts earlier (before the notification date) are permitted to ship their consignments at zero duty until 15 October, notwithstanding the finance ministry’s assertion that the export duty takes effect immediately.

According to the statement from the finance ministry, “Rate of duty shall take effect on the sixteenth day of October.” “Goods meant for export shall have entered the customs station for the purpose of exportation before the 25th day of August, 2023, and goods meant for export shall be backed by irrevocable Letter(s) of Credit, wherein the said Letter(s) of Credit has been opened before the 25th day of August, 2023, and the message exchange date between the Indian and Foreign bank or swift dAccording to trade sources, the objective is to slow down or delay shipments. By 15 October, the government will have a fair idea about expected rice production.

The Indian government’s initial consideration of this 20% levy on exports of non-basmati parboiled rice was first made public in a Mint story on August 22. The goal of this action is to stabilise prices and increase inventories on the domestic market in order to combat the ongoing inflationary pressures that have been made worse by rising prices.

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Despite the government banning non-basmati white rice exports on July 20, three days after Russia withdrew from the Black Sea grain pact, domestically high rice prices have been a cause for concern. Since April, parboiled rice prices have increased by 19% on the domestic market and 26% internationally, while the amount and price of the rice variety exported have increased by 21% and more than 35%, respectively.
According to Suraj Agarwal, CEO of Rice Villa brand, “though negative emotions among millers in the market may see a short-term correction, no major impact is expected on prices as stock of paddy is depleting and monsoon is also in deficit.”

At the moment, basmati rice costs 92–93 and parboiled rice costs 37–38 on average across all of India. According to traders, basmati types of free-on-board (FoB) parboiled rice cost $1,000 per tonne and are priced around $500 per tonne. Around 25–30% of the world’s parboiled rice commerce is controlled by India.

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From 12% in June and 4.3% in July 2022, retail inflation for rice increased to 12.96% in July.

Economically disadvantaged populations who depend on Indian white rice in nations like Bangladesh and Nepal have felt the effects of the embargo the most keenly. African countries like Benin, Senegal, Togo, and Mali that predominantly import broken rice—a cheap and incredibly filling variety—have also been adversely impacted.

The export ban imposed by India last month has resulted in a significant spike in rice prices around the world of 15–25%. As a result, West African countries now use Indian parboiled rice to meet their domestic rice consumption needs. The increased price bids from India’s rivals like Thailand, Vietnam, and Pakistan served as the impetus for this change.

According to government data, this dynamic has caused India’s parboiled rice exports to noticeably increase during the current fiscal period, amounting to almost 3.1 million metric tonnes compared to the 2.58 million metric tonnes recorded during the same period in the previous fiscal year.