Indian Government Takes Measures to Curb Basmati Rice Export

The Indian government has decided to implement new measures aimed at preventing potential “illegal” exports of white non-basmati rice under the guise of premium basmati rice. To counter this issue, the government has announced restrictions on the export of basmati rice priced below $1,200 per tonne. This decision comes in response to the observation that rice exports have remained high despite previous limitations on certain varieties. The commerce ministry issued a statement on Sunday, detailing its plan to combat this challenge.

Background and Rationale

The move to restrict basmati rice exports stems from the government’s effort to stabilize rice prices in the domestic market. Over the past year, the government has undertaken various steps to bolster the availability of rice within the country. This strategy included prohibiting the export of broken rice in September of the previous year and recently imposing constraints on the export of non-basmati white rice. The most recent action involved imposing a 20% export duty on par-boiled non-basmati rice. With these measures, India has effectively imposed export restrictions on all categories of non-basmati rice.

“It has been noticed that despite restriction on certain varieties, rice exports have been high during the current year. Up to 17th August 2023, total exports of rice (other than broken rice, export of which is prohibited) were 7.33 MMT compared to 6.37 MMT during the corresponding period of the previous year, registering an increase of 15.06 per cent,” the ministry said.

The government’s focus on controlling the prices of rice within the country has prompted these measures. The ban on the export of non-basmati white rice in July was a significant step toward this goal. However, it was observed that despite these restrictions, there has been a notable increase in rice exports, particularly of parboiled rice and basmati rice. Both of these varieties have remained free from export constraints.

New Guidelines and APEDA’s Role

The government has now issued specific instructions to the Agricultural and Processed Food Products Export Development Authority (APEDA) to introduce enhanced safeguards that prevent the potential illicit export of white non-basmati rice while claiming it to be basmati rice. According to these guidelines, contracts for basmati rice exports valued at $1,200 per metric ton (MT) and above will be eligible for registration to obtain a Registration–cum–Allocation Certificate (RCAC).

Contracts with a value below the specified threshold of $1,200 per tonne will be put on hold. A committee under the leadership of APEDA’s chairman will be established to analyze such contracts, assess the price variations, and explore the use of this route for the export of non-basmati white rice. The committee has been instructed to deliver its findings within one month, after which appropriate decisions regarding lower-priced basmati exports can be made.

The ministry highlighted the significant variation in contract prices for exported basmati rice. While the average export price for the current month was $1,214 per MT, the lowest contract price recorded was $359 per MT. The committee’s analysis will shed light on these price variations and the potential utilization of this avenue for non-basmati white rice exports.

Export Trends and Rice Production

India’s export of basmati rice reached $4.8 billion in terms of price during the 2022-23 fiscal year, amounting to 45.6 lakh tonnes in volume. In contrast, non-basmati rice exports were valued at $6.36 billion, with a volume of 177.9 lakh tonnes. As for rice production, India’s output is estimated to have risen from 129.47 million tonnes in the previous year to 135.54 million tonnes in the 2022-23 crop year, according to data from the agriculture ministry.

With a focus on stabilizing domestic prices and ensuring food security within the country, the government has consistently implemented measures to limit rice exports from India. Despite the export restrictions placed on certain varieties, the data indicates that rice exports have witnessed a 15.06% increase up to August 17 of the current year compared to the same period in the previous year.

The surge in export volumes extends to parboiled rice and basmati rice, both of which have experienced substantial growth. Parboiled rice exports have grown by 21.18%, while basmati rice exports have increased by 9.35%. Even with the imposition of a 20% export duty on non-basmati white rice and its subsequent prohibition, exports of this variety have still managed to rise by 4.36%.

International Context and Conclusion

Internationally, strong demand from Asian buyers, coupled with production disruptions in major rice-producing countries like Thailand, has led to continuous increases in international rice prices. The FAO (Food and Agriculture Organization) Rice Price Index recorded a 19.7% rise in July 2023 compared to the previous year. Despite these price increases, Indian rice remains competitively priced, driving robust demand and resulting in record exports during the past two fiscal years.

The government’s decision to restrict exports is also fueled by credible field reports indicating misclassification and illicit export of non-basmati white rice, often under the HS codes designated for par-boiled rice and basmati rice. These reports have prompted the government to take decisive action to safeguard against such practices. The government’s proactive stance on this issue is in line with its broader efforts to bolster domestic food security and stabilize rice prices for its citizens.

The new measures, guided by APEDA’s oversight and the formation of the evaluation committee, signal the government’s commitment to ensuring the integrity of rice exports and preventing the misuse of export channels for non-basmati white rice. As India navigates the complexities of global rice trade, these measures are poised to play a pivotal role in maintaining transparency and sustainability in the export sector.

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