The government is considering the demand to allow the export of broken and non-basmati white (raw) rice duty-free for which letters of credit (LCs) were “transmitted on the exporter” and cargo received at Container Freight Station(CFS) before the ban came into effect on September 9.

In a memorandum to the government, The Rice Exporters Association (TREA) has said while the transitional arrangement for allowing shipments — which could not be loaded due to bad weather conditions — be extended up to October 15, the government should also consider two other factors to include them under in-transit definition.

Exporters shouldn’t lose

It said nearly 4 lakh tonnes (lt) of broken rice having valid LCs were already either at ports or at CFS before September 9 and those consignments should be allowed. Similarly, nearly 5 lt of white rice with irrevocable LCs were lying either at ports or CFS before September 9 which should be allowed without duty.

“One firm has as low as 25 tonnes of white rice with valid LC and it cannot re-negotiate the rate with the importer. Even if it cancels the order, it will bear some loss and the government should ensure no exporter makes a loss, even if there is no profit, due to its policy decision,” said an industry official. Sources said the Commerce Ministry has assured the exporters that all aspects will be taken into account including those raised by TREA as well as the concerns of the Food Ministry before deciding on their plea.

Last week, the Food Secretary had ruled out any possibility of duty relaxation for those who have opened LCs before ban.

Confusion at ports

The Directorate-General of Foreign Trade on September 8 issued a notification prohibiting the export of broken rice (parboiled and basmati exempted) effective from September 9 but allowed the consignments to be exported under specific conditions between September 9 and 15. It recently extended the last date to September 30 for those under transitional arrangements. The Centre also imposed a 20 per cent duty on the export of all varieties of rice, except basmati and parboiled rice, with effect from September 9.

Exporters are saying there are confusions at ports which the Centre should clarify and issue single guidelines.

While there is no clarity on definition of broken rice, since the full length rice has a tolerance level of 25 per cent broken grain, it is assumed that broken rice falls under anything above 25 per cent and upto 100 per cent, an exporter said. Customs authorities in Chennai recently issued guidelines on sample testing of rice consignments.

Three exporters have challenged the Centre’s curbs on rice exports in the Andhra Pradesh High Court with a Bench of Justices C Praveen Kumar and AV Ravindra Babu issuing a notice to the Ministry of Finance’s Revenue Department and Visakhapatnam Commissioner of Customers. The three exporters had filed a plea urging the court to issue a writ of mandamus to allow their shipments duty-free since “let export” orders had been issued on September 8.