Rice export consignments with the “presence of certain content of broken grains” will no more face problems with the Indian government issuing a clarification on Tuesday.

The Centre said 5 per cent and 25 per cent broken rice, which is normal rice with “permissible limits of broken rice as per standards” are exempted from any export ban.

However, exporters will have to 20 per cent duty as stipulated in a notification dated September 8, 2002, the Directorate-General of Foreign Trade (DGFT) said in a trade notice. 

Trade’s complaints

The notice clarifies the situation on problems with broken content in rice meant for exports, It said 5 per cent and 25 per cent broken rice will not be treated as “fully broken rice”. 

The notice comes on the heels of traders and exporters complaining that a trade notice issued on September 28, which said “The Rice Grade and Marking Rules, 1939” would apply for deciding on the controversy over “the presence of broken contents” in rice shipments. 

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The notice had erroneously mentioned “The Rice Grade and Marking Rules, 1939” as “The Rice Grade and Marketing Rules, 1939”. Exporters said there were quite a few problems since the 1939 law referred to jute bags, whilst currently, shipments were made in polypropylene bags. Shippers said even the Food Corporation of India does not follow these rules in procuring the cereal. 

Consignments held up

Exporters said at least 0.9 million tonnes of white and parboiled rice for which letters of credit had been opened before September 8 - the day when the Centre notified curbs on rice exports - and were in transit. 

While the Centre has banned exports of broken rice, it imposed a 20 per cent export duty on non-basmati white rice, brown rice and paddy. Parboiled and basmati rice have been exempted from any curbs. 

The broken contents in non-basmati rice, which can be exported after payment of 20 per cent export duty, had held up thousands of containers. 

An exporter based in South India, speaking on the condition of anonymity, said an exporter in western India was paying at least ₹2 crore daily as demurrage and warehouse rent since his consignments were held up.

Ready to pay duty

According to traders, the 1939 law was meant to be a reference for Customs officials and the volume of broken grains in the consignments should be well within the permissible limits.  

The DGFT said the latest notice was in view of exporters representing that 5 and 25 per cent broken rice that had irrevocable letters of credit were being stopped at ports. 

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Exporters said they were willing to pay the export duty and today’s notice should provide them with the relief. 

India curbed rice exports as the kharif paddy acreage is lower due to deficient rainfall in key growing areas of Bihar, Jharkhand, West Bengal and east Uttar Pradesh. In addition, rice stocks with the FCI are lower than last year as of September 1 at 24.46 mt (26.83 mt a year ago). Unmilled paddy stocks, too, are lower at 16.16 mt (17.60).