India, the top rice exporter, may relax export restrictions to avoid a glut before the new crop arrives. LT Foods, KRBL, and Chaman Lal Setia Exports saw significant share surges. The move could benefit countries in West Africa and the Middle East.

3 rice stocks surge up to 14.5% on reports of India considering easing rice export limits(Pradeep Gaur/Mint)

Shares of Chaman Lal Setia Exports, KRBL, and LT Foods surged by as much as 13% in early trading on Tuesday following reports indicating that India, the world’s leading rice exporter, plans to ease restrictions on rice exports.

In response to these developments, LT Foods saw its shares soar by 14.5% in early trading, reaching a new 52-week high of ₹296 each, while KRBL experienced a 13% spike to ₹348.70. Similarly, shares of Chaman Lal Setia Exports rose nearly 9% to ₹223 apiece during the session.

India, the world’s top rice shipper, may relax restrictions on exports of some varieties to avoid a glut in the country before the new crop arrives in the market in October, Bloomberg reported, citing people familiar with the matter.

“The government is considering allowing white rice shipments with a fixed duty,” said the people to Bloomberg, who asked not to be identified as the talks are confidential. “The authorities may also scrap a 20% tax on parboiled rice exports and impose a fixed levy instead to discourage under-invoicing of cargoes,” the same people were quoted as saying.

Any such move could help cool benchmark Asian rice prices, which reached the highest in more than 15 years in January, following India’s move to start restricting sales of key varieties in 2023. “That would be good news for some countries in West Africa and the Middle East that rely on the South Asian nation for most of their requirements of the food staple,” the report said.

A spokesperson representing both the food and commerce ministries did not immediately respond to requests for comment.

India’s total rice exports dropped by 21% year-on-year to 2.9 million tons in the first two months of the fiscal year beginning April 1, according to government data. Non-basmati rice shipments saw a steeper decline, falling 32% to 1.93 million tons during the same period.

Farmers in India are currently in the midst of sowing their primary rice crop for the upcoming harvest, coinciding with the onset of the monsoon season. Planting activities are expected to peak in July, with harvesting scheduled from late September onwards.

As of July 8, acreage under rice cultivation stood at 6 million hectares (14.8 million acres), marking a 19% increase from the previous year, as reported by the farm ministry. This rise follows a recovery in monsoon rains after a period of deficient rainfall last month.

Boosting rural economy

Despite earlier exit poll expectations, the Bharatiya Janata Party (BJP) has performed below expectations in Uttar Pradesh, Maharashtra, and West Bengal—states with substantial rural and agricultural voter bases.

With state elections in Maharashtra less than six months away, the government has recognized the pressing need to address rural concerns and has taken significant steps to bolster the rural economy.

Shortly after assuming office, the central government swiftly moved to bridge gaps observed in states with heavy agricultural and rural influence. Initiatives such as releasing ₹2,000 installments for farmers, providing financial assistance to construct 30 million new homes in rural and urban areas, and increasing the Minimum Support Price (MSP) for 14 Kharif crops for the 2024–2025 season reflect a policy shift aimed at enhancing rural spending.

Published Date: July 9, 2024