NEW DELHI : India on Thursday imposed a 20% tax on the export of various grades of rice, excluding the premium basmati variety, in a move aimed at restricting shipments, a finance ministry notification said.
The levy comes when the country, which is the world’s largest overseas seller of rice, is anticipating a lower output of kharif or summer-sown paddy due to a patchy monsoon. The food ministry had proposed some restrictions on export to keep a lid on prices, HT reported on August 26. Levies on export, which are a kind of tariff barrier, are designed to make a commodity expensive for foreign buyers, dampening shipments. Poor rains in rice-growing states and a rise in cereal prices are the main reasons for the indirect curbs on export through a duty, analysts said.
There would be adequate availability of the rice, and the government could release stocks from its reserves should a need arise, an official said, requesting anonymity. In May, India banned the export of wheat, as a heatwave plunged federally held wheat reserves to a 14-year low. However, the government has a huge stockpile of rice.
As on August 1, the state-run Food Corporation of India had 41 million tonnes of milled and rice paddy stocks, while the buffer requirement for the season is 13.5 million tonnes.
India’s steps to restrict food shipments come amid a dire global food crisis driven by the Ukraine war and supply disruptions due to the knock-on effects of the pandemic.
“Scanty rains in rice-producing states might crimp both yields and output,” said Rahul Chauhan, an analyst with IGrain Ltd, a private firm tracking food commodities.
A poor monsoon in states such as West Bengal, Jharkhand and Uttar Pradesh prompted a late switch by many farmers to other crops or quickly maturing varieties of rice.
Unlike wheat, India is a major exporter of rice. In 2021-22, the country exported nearly 22 million tonne of rice, about a sixth of its total output. India accounts for 40% of the world’s rice shipments. India’s curbs to restrict food export are likely to drive up global prices, analysts said.