The Centre has decided to impose an export duty of 20 per cent on non-basmati rice (excluding parboiled) from September 9 amidst concerns over domestic price rise and a possible decline in rice production in 2022-23 due to deficient monsoon rains.

The export levy of 20 per cent has been imposed on rice in husk (paddy or rough), husked (brown) rice, and semi-milled or wholly-milled rice, whether or not polished or glazed (other than parboiled rice and basmati rice), according to a notification issued by the Revenue Department on Thursday. “The notification will come into force from September 9, 2022,” it stated.

Last month, the US Department of Agriculture (USDA) projected that rice production in India may decline to 128.5 million tonnes in 2022-23 (marketing year) against a record production of 130.29 million tonnes in 2021-22. “This decline will mark the first time India’s rice production has not had a year-to-year increase since MY 2015-16. The 2022 South-West monsoon rains have not been as abundant in north-east India as they have been in the rest of the country,” the USDA report said.

Bangladesh’s decision to reduce import duty on rice to 5 per cent from 25 per cent late last month could also be a contributing factor to India’s apprehensions on domestic availability as a duty cut may result in increased demand from the neighbouring country.

“The timing (of the export duty) is perfect. It is being imposed just before the Chinese crop. A market equilibrium will develop,” said trade analyst S Chandrasekaran.

Shipments affected

The export duty will hurt the white rice shipments, which account for about 60 per cent of the non-basmati rice exports, said BV Krishna Rao, President of The Rice Exporters Association. India had exported about 17 million tonnes of non-basmati rice during the financial year ended March 2022. The parboiled rice and 100 per cent rice brokens account for 20 per cent each of the overall shipments.

“A 10 per cent duty on white rice exports would have been more reasonable,” Rao said. The white rice shipped from India is mainly consumed in the African countries.

The exports of non-basmati rice, the top grossing agri-commodity from the country last year, registered a growth of 10 per cent in volumes to 5.81 million tonnes during April-July of the current financial year over the same period last year’s 5.28 million tonnes. In value terms, the non basmati rice shipments were up 9.24 per cent at $2.08 billion during April-July as compared to $1.91 billion in the same period last year.

India banned the export of wheat in May 2022 and subsequently banned export of wheat flour, maida and semolina as well, to ensure adequate availability in the domestic market and keep prices in check. An unprecedented heat wave in India in March this year had damaged wheat crop.