August 30, 2023
In a move aimed at alleviating the impact of a sudden ban on exports of non-basmati white rice, India has granted traders permission to ship out their stranded cargoes that have been held up at ports. The decision comes after a surprising embargo was placed on the widely consumed non-basmati white rice on July 20, 2023, to control escalating domestic prices.
The Directorate General of Foreign Trade (DGFT), a unit of the trade ministry, issued an order on Tuesday stating that traders would be allowed to move their cargoes, contingent upon payment of the export duty by the same date the ban was imposed. Prior to the ban, exports of this rice grade attracted a 20% tax.
Traders had been grappling with significant losses as thousands of tonnes of non-basmati white rice shipments were effectively trapped at various Indian ports following the export prohibition. Prem Garg, the President of the Indian Rice Exporters Federation, indicated that approximately 150,000 tonnes of these cargoes are now set to be shipped out from different ports, relieving the industry of a considerable burden.
“Three ships were standing still at the Kandla port and a lot of containers were lying at different ports, causing a lot of problems for the rice industry,” Garg remarked.
The export of non-basmati white rice is a crucial element of India’s agricultural trade, with the nation accounting for a substantial 40% of global rice exports. These exports reach over 150 countries, including economically vulnerable regions in Africa and Asia. Notably, India achieved a record-breaking rice export of 22.2 million tons in the year 2022.
20%Tax On Parboiled rice
In addition to permitting the release of trapped cargoes, the Indian government, following the ban on non-basmati white rice exports, also imposed a 20% tax on parboiled rice shipments and introduced a minimum price for overseas sales of basmati rice. These measures have been implemented as part of a broader strategy to mitigate the impact of soaring local prices.
The export restrictions initiated by India have contributed to upward pressure on global rice prices. However, the recent decision to allow the release of stranded cargoes at ports is anticipated to offer relief not only to Indian suppliers but also to consumers in needier nations, particularly in East and West Africa. Prem Garg highlighted the potential positive impact of the decision on such countries.
“The permission to allow the cargoes stuck at ports will not only help Indian suppliers, it will also help consumers in some of the most needy countries,” Garg stated.
The move is expected to have a positive effect on supply chains and market dynamics, alleviating strain on the rice industry while also addressing the needs of vulnerable economies.