The issue of irregularities in the export of non-basmati white rice, which was shipped as organic rice, is turning out to be graver than expected. Some of the exporters who have been affected by this episode as their shipments got held up are now approaching the courts seeking compensation.
In the second instance, the Gujarat High Court has asked the Deenadayal (Kandla) Port office and Customs officials to “arrest” merchant vessel SW South Wind I which is lying at the port and within Indian territorial waters until further orders.
A single-judge bench of Justice Mauna M Bhat passed an oral order for the detention following a petition filed by Farmart Services Private Ltd. Farmart moved the Gujarat High Court as its consignments of 2,000 tonnes of non-basmati parboiled rice got held up after the vessel was detained by the Department of Revenue Intelligence (DRI) officials, who suspected that white rice was being exported as organic rice.
Another ship detained
The DRI officials’ action followed a businessline report on irregularities in the export of organic rice as some exporters were allegedly shipping out white rice in the garb of organic rice. Besides SW South Wind I, they have detained another ship, MV Della. The suspicion of irregularities arose after organic rice exports in the first four months of the fiscal exceeded the total shipments in the entire 2023-34 fiscal.
On October 4, Justice Nikhil S Kariel of the Gujarat High Court ordered the “arrest” of SW South Wind after MEIR Commodities India moved the court against the detention of its 450-tonne consignment.
Farmart told the court that it had offered to sell 2,000 tonnes of IR-64 parboiled rice through broker SM Agro Impex to ATC Trading SARL (“ATC”) at $606 a tonne. To export the cargo, it entered into an agreement with OK International Logistics LLC. The cargo was a small part of the entire cargo of 50,670 tonnes.
On July 27, the entire consignment was loaded in the vessel and the ship was ready for departure on August 9.
Next hearing on Oct 24
However, a shipping firm told Fairmart that the vessel had been detained as it did there was a “lack of clearance for the cargo”. The company’s counsel argued that his client’s cargo was duly compliant with the export standards. “It is only because of some other prohibited cargo on board the defendant vessel that it has been detained,” the counsel said.
Posting the next hearing to October 24, Justice Bhat ordered the arrest of SW South Wind I with its hull, engines, gears, tackles, bunkers, machinery, apparel, plant, furniture, equipment and all appurtenances at the port, where it is lying. She said in case the vessel owners come forward to pay $1.44 million to Farmart, the arrest order would not be executed.
DRI officials detained rice consignments suspecting that white rice was being exported in the garb of organic rice. Some exporters are reported to have violated the ban on white rice. (The ban was lifted on September 28, 2024). In the case of parboiled, they had dodged the 20 per cent export duty.
What data show
Data revealed that some of the consignments did not reach their destination. Also, some of the buying nations, particularly in Africa, cannot afford to buy organic rice, which commands a premium.
Data showed that 22,126 tonnes and 16,547 tonnes of organic rice shipments set sail for Vietnam and Kenya, respectively. But, hardly 2,000 tonnes reached their destinations.
Following businessline’s report, the Agricultural and Processed Food Products Export Development Authority (APEDA), the nodal agency for organic exports, suspended Sikkim State Organic Certification Agency from issuing organic certification and Reliteaur Foods Private Limited from exporting organic produce.
The suspension is for one year and both have been fined ₹10 lakh each. Reliteaur Foods has about 6,700 tonnes of rice cargo detained in SW South Wind I.