Centre imposes 20% export duty on parboiled rice

Aug 26, 2023 09:38 AM IST

The tariff by India will make parboiled rice expensive for foreign buyers, thereby limiting its overseas sales and boosting domestic availability

The Union government late on Friday imposed a 20% duty on exports of parboiled rice with immediate effect, according to a notification, expanding a range of curbs on overseas shipments of cereals amid high domestic prices.

 (Representative Photo)
(Representative Photo)

India, the world’s largest exporter of grain, had halted the export of white rice on July 20, sending global prices to a 12-year high as measured by the Food and Agriculture Organization’s (FAO) rice price index. The fresh curb on the export of the parboiled variety is likely to accelerate global prices further.

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The tariff by India will make parboiled rice expensive for foreign buyers, thereby limiting its overseas sales and boosting domestic availability. Last month’s export ban on common grades of rice had quickened overseas shipments of the parboiled variety.

The government has now deployed a full gamut of export restrictions on cereals. The curbs on food trade come on the back of high food inflation, which rose a sharp 11% in July, as the overall consumer inflation rate accelerated to a 15-month high of 7.44%.

India banned wheat export in May 2022 following a smaller crop yield due to an extreme heat wave. This year, the central government has focussed on bolstering domestic food stocks due to concerns over an uneven monsoon that could be impacted by the El Nino weather pattern.

El Nino, a global weather pattern marked by warmer ocean temperatures, often causes drought in the country by suppressing the monsoon.

The fight to control cereal inflation has been two-pronged. One, the government has stopped exports, and second, it has been releasing stocks from state-held granaries.

On August 8, the Centre announced it would release five million tonnes of additional wheat and 2.5 million tonnes of rice through auctions. The government has also decided to reduce the reserve price of rice from 31 a kg to 29 a kg to improve offtake or quantities actually sold to traders.

“The current risk to food inflation emanates from excess rain damage to vegetables. Looking at current production trends, pulses are in a vulnerable position,” Dharmakirti Joshi, chief economist at Crisil Ltd, wrote in a recent research note.

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    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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