The Centre imposed a 20 per cent export duty on parboiled rice with immediate effect to curb a surge in shipments since July 20 when it banned exports of (non-basmati) white rice.

According to a notification issued by the Ministry of Finance late on Friday night, the duty will be in force till October 15. The Government will also soon notify a minimum export price (MEP) for basmati to ensure that other varieties of rice are not exported in the garb of the fragrant rice. 

 Though the Finance Ministry said the export duty comes into  immediate effect, exporters who have contracted before the notification was issued are allowed to ship their consignments at zero duty until October 15, traders said. The October 15 date is seen as the time by which the Union Government will have a fair idea of the kharif rice production. 

“The Food Corporation of India (FCI) will begin rice procurement for the central pool from October 1 and by October 15, it will have a fair idea based on the arrivals. After that, the Centre could even ban parboiled rice exports,” said a trading source, who did not wish to identify.

Trade analyst S Chandrasekaran said following the 20% duty will lead to inflation in rice, particularly in South-East Asia. Indian parboiled rice is currently quoted at $500 a tonne. 

“If the 20 per cent duty is taken into account, then Indian parboiled will cost $600. Thailand parboiled is priced at $615 a tonne. If the rupee depreciation is factored, then the gap will be $20 and an arbitrage still exists,” he said.  The Indian duty on parboiled rice will further push up rice prices further, particularly Thailand. Global rice prices are currently ruling at a 15-year high. 

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The Centre’s curbs on rice exports are seen as part of measures to control inflation as announced by Prime Minister Narendra Modi during his Independence Day address. The new measures on export of rice, a key staple for the majority of the population, will ensure higher domestic availability, officials said.

The Committee of Secretaries, headed by the Cabinet Secretary, decided to impose the MEP on basmati rice on August 21, sources said. However, unlike other commodities in which the Director-General of Foreign Trade notifies the MEP, in case of basmati, the agri-export promotion body Apeda will implement it, the sources said.  Basmati rice export is allowed only after registration of a contract with Apeda which issues certificates to exporters allowing shipments.

Though overall acreage of paddy in the current kharif season is 4 per cent higher than year-ago, per data released by the Agriculture Ministry on August 25, the condition of crops in Southern States is in “bad shape”, experts said, pointing to deficient rainfall in many parts. Karnataka, for instance, has received 75 per cent below normal rain during August 1-25, officials said.

 On the other hand, trade sources said the Centre’s current objective is to delay shipments, sources said.  

Also read: ‘No plans to reconsider rice export ban as food inflation spikes’ 

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