The Commerce Ministry is likely to move a proposal before the Amit Shah-led Committee of Ministers (CoM) on food prices to “suitably change” the export duty structure on parboiled non-Basmati rice. It will likely seek a direction on industry’s demand to cut the minimum export price (MEP) of Basmati rice from the current $950/tonne.
Rice industry representatives from different export bodies met with senior officials of Commerce and Finance Ministries on June 19, sources said. Discussions took place on various issues, including two key demands – a fixed absolute duty of $90/tonne on non-basmati parboiled rice and a reduction of MEP on Basmati rice to $850/tonne, sources said.
“While importers are contracting at a price inclusive of the export duty, the government has been insisting on levying 20 per cent duty on the contracted price,” said an exporter who participated in the meeting. Currently, the free-on-board (f.o.b) price at Kakinada is about $550/tonne including the 20 per cent export duty, but exporters are finding it difficult when the Customs Department insists on paying duty at $550, said the exporter. A fixed duty will check under-invoicing by exporters having offices/firms abroad.
Exporters are demanding that shipments of white rice be permitted by fixing an MEP of $500/tonne and a fixed export duty of $100/tonne.
Another exporter who participated in the deliberations said the government has reservations about lowering Basmati MEP since the average price was over $1,000/tonne since October 2023 after the arrival of the new crop. The Government is unlikely to accept the demand for opening up the white (raw) rice export asinflation in rice is still a concern, and unless it is brought down, export restrictions may continue, he said.
Trade sources said the average monthly Basmati export price was $1,127/tonne in February, dipped to $1,096/tonne in May, and is likely to fall further this month.
Basmati rice exports were up 14 per cent at $534 million in April against over $470 million in the same period a year ago. In volume terms also, the growth was 17 per cent at over 0.5 million tonnes (mt) compared with 0.43 mt a year ago. During 2023-24, shipments clocked 15 per cent growth to a record 5.24 mt.
Wheat prices
Meanwhile, the Food Ministry issued a statement on Thursday, saying the CoM directed officials to monitor wheat prices closely and take suitable measures to ensure price stability for the consumers.
The panel of ministers met on Thursday to review the prices of essential commodities, the Ministry said.
The Centre procured 26.6 million tonnes (mt) of wheat until June 18, up from 26.2 mt in the entire season last year. However, the current purchase is about 71 per cent of the target of 37.29 mt.
The Food Ministry said sufficient wheat stocks are available to undertake market interventions, as and when required, even after meeting the annual requirement under the National Food Security Act (NFSA) and other welfare schemes, estimated at 18.4 mt.