Export Duty Implemented for Parboiled Rice in India

Export Duty

In a recent official notification released on August 25, the Indian government has introduced a 20 per cent export duty on parboiled rice. This regulatory move follows a decision taken a month earlier to prohibit the export of non-basmati white rice, a commonly consumed variant. The driving force behind these restrictions is the looming threat of El Nino, a climatic phenomenon potentially leading to reduced rainfall, and consequently, strain on domestic staple grain supplies.

El Nino Fears Shape Export Policies

The restrictions on rice exports have been primarily shaped by concerns over El Nino’s impact. The Indian government is cautious due to the potential for reduced rainfall activity affecting kharif crop cultivation. To mitigate these potential effects, the export ban on non-basmati white rice is anticipated to extend at least until November, as revealed by anonymous sources earlier this month. The government’s approach prioritizes prudence to preemptively manage potential consequences.

India’s Parboiled Rice Export Dynamics

India stands as a significant exporter of parboiled rice, accounting for substantial trade volumes. Notably, in 2022, the nation exported 7.4 million tons of this rice variety. The imposition of export duties on parboiled rice seeks to balance trade considerations with domestic grain availability amidst concerns of potential supply disruptions.

A Balanced Approach for Domestic Supply and Prices

The Indian government’s measures aim to not only regulate domestic rice prices but also ensure an adequate grain supply. By retaining the export ban until at least the conclusion of the Kharif crop sowing season, the government plans to assess the impact of El Nino on yield and market dynamics. The decision to lift the export ban will hinge on the performance of monsoon crops and the stability of the domestic grain market.

Rice Prices and Mitigation Strategies

As of August 7, both retail and wholesale prices of rice have surged compared to the previous year, rising by 10.63 per cent and 11.12 per cent, respectively. The government’s response includes not only export bans but also the Open Market Sale Scheme (OMSS), through which rice is being sold to control essential commodity prices. The government has strategically adjusted the reserve price of rice within the scheme to encourage participation and alleviate price pressures.

In navigating the delicate balance between trade interests and domestic food security, India’s decisions to impose export duties and retain export bans are driven by the need to preemptively address the potential consequences of El Nino on the country’s vital rice sector.

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