Govt may hike export duty on parboiled rice or fix MEP

The Centre on Monday told rice traders to lower the cereal’s prices and warned that it would be forced to take action if they fail to bring down rates. Sources said there could be an imminent hike in export duty on parboiled rice or a tariff value imposed or both measures could be imposed simultaneously.

“The rice industry needs to ensure that the prices in the domestic market need to be brought down to optimal levels and efforts at profiteering dealt with strictly,” according to an official statement referring to the message conveyed by the Food Ministry to the rice traders in a meeting on Monday. “The benefit of lower prices has to be passed on expeditiously to the end consumers. The leading rice industry associations were advised to take up the issue with their members and ensure that the retail price of rice is reduced with immediate effect,” the statement said.

A la edible oil move

A similar exercise was done last year to curb retail prices of edible oils and the government ensured to bring down domestic prices after fall in global prices, an industry official said and added that in the case of rice the trading is highly fragmented and “a little more difficult to enforce”. Representatives of All India Rice Exporters Association, The Rice Exporters Association and the Indian Rice Exporters Federation participated in the discussion.

Food secretary Sanjeev Chopra convened the meeting in New Delhi with the leading rice processing industry representatives to review the domestic price scenario of non-basmati rice, the ministry’s spokesperson said.

The government told the stakeholders that the annual inflation rate of rice is hovering around 12 per cent for the past two years and is cumulating over the years which is a cause of concern, industry sources said. Chopra said the domestic prices of rice are increasing despite a good crop this kharif, ample stocks with Food Corporation o India (FCI) and various regulations in place curbing exports.

When an industry official sought reduction in reserve price of FCI’s rice offered in the weekly auction from ₹29/kg to ₹ 27, Chopra asked them to participate the bidding first after which the demand could be considered. Last week, FCI raised the maximum quantity limit to 2,000 tonnes from 1,000 tonnes per bidder in each auction and also reduced the minimum quantity to 1 tonne from 10 tonnes under the open market sale scheme. It hopes to increase the sales of rice as only 1.19 lakh tonnes (lt) were sold since June whereas 48.12 lt of wheat has been sold in the same period.

Checking under-invoicing

The government told the representatives that the maximum retail price (MRP) should be reduced and it is not expected to fix a higher MRP at ₹100/kg and provide 30 per cent discount whereas its actual price should be ₹50-55 in case of common varieties of non-basmati rice, the sources said.

There were some indications that the government could increase the customs duty from 20 per cent to 30 per cent or fix a minimum export price on which the duty could be levied to stop under invoicing, sources said. “Even both measures are possible,” a source said.

The Food Ministry statement said the Government suggested that if a wide gap between the MRP and actual retail price existed, it needs to be brought down to a realistic level in order to safeguard the interest of the consumers. The Centre indicated that traders should levy a profit of maximum 10 per cent and not beyond as it is a high volume commodity.

“The Department of Food and Public Distribution closely monitors and reviews the prices of rice in the country and steps in whenever any intervention is required to ensure affordability of rice which forms an important part of the diet. The Indian consumers thus can expect to pay less for rice in the coming days,” the statement said.

Published Date: December 18, 2023