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June 2024

Indian G2G deal rice importers seek waiver of export duty

For African countries, it increases landing cost by $80/tonne

India has resorted to curbs on rice exports since September 2022 on food security grounds | Photo Credit: REUTERS

Some of the countries that have been allowed to receive Indian white rice on government-to-government (G2G) deals are seeking waiver of customs duty on the cereal’s consignments. 

African countries are the main ones seeking duty-free imports of rice from India, trade sources said.

Customs officials imposed a 20 per cent duty on white rice consignments of 5,300 tonnes from Visakhapatnam port last month to Port Louis in Mauritius.  

FTA exemption

“Some of the buyers who are getting rice through G2G deals are arguing why India should impose an export duty for such deals.” an exporter said on condition of anonymity.

Official sources said while white rice exports, which are G2G deals since the Centre has banned its shipments, are levied a 20 per cent export duty, no tax is imposed on consignments heading to nations with which India has a free trade agreement (FTA). “India is not imposing export duty on countries which have entered into an FTA with it. That way, there is no duty for consignments heading to Nepal, but it is imposed on those for Bhutan,” the exporter said.

NCEL gets mandate

In October, the government allowed exports of 10.34 lakh tonnes (lt) of non-basmati white rice to seven countries on G2G basis. The Directorate-General of Foreign Trade notification on Wednesday said the shipments would be handled by the National Cooperative Export Ltd (NCEL).

As per the notification, the maximum quantity of rice — 2.95 lt — was allocated to the Philippines, while Cameroon got 1.9 lt, Malaysia 1.7 lt, Cote d’Ivoire 1.42 lt, Republic of Guinea 1.42 lt, Nepal 95,000 tonnes and Seychelles 800 tonnes.

The Centre has allowed NCEL to handle the G2G as part of its efforts to promote cooperatives, though a section of the trade has questioned the decision. “Despite the fact that farmer producer organisations and farmers, from whom NCEL will procure, stand to gain, Customs authorities are imposing a duty,” said the exporter.

Burden on poor nations

Sources said NCEL has so far exported 5,301 tonnes to Mauritius and 1,150 tonnes of rice to Bhutan. The organisation is at an advanced stage of negotiations to ship the cereal to the Philippines, Seychelles, Cameroon and Singapore. 

Trade sources said while policy decisions are taken by the Commerce Ministry, the duty is imposed by Customs officials, who say the orders are clear and unambiguous.

The 20 per cent duty on rice exports increases the landing cost of rice by $80-85 a tonne. For some of the poor African countries, this might be a burden, say trade sources.

Currently, Indian parboiled rice is quoted at $515 a tonne f.o.b, according to the Thai Rice Exporters Association. 

businessline’sHyderabad correspondent KV Kurmanath who visited Cote d’Ivoire last month reported that Indian curbs have resulted in rice prices increasing by 25-30 per cent in the African nation. Three of the top five countries importing Indian rice are in Sub-Saharan Africa – Benin, Senegal and Cote d’Ivoire – with each buying over one million tonnes in 2022.   

Why curbs

India has resorted to curbs on rice exports since September 2022 on food security grounds, particularly when wheat production was affected in 2022 and 2023 due to indifferent weather.

As a result, the Centre began distributing more rice under the public distribution system, while also trying to cool prices through such curbs. On September 8, 2022, the Centre banned exports of broken rice and imposed 20 per cent export duty on white rice shipments.

On July 20 this year, it banned exports of  white rice. On August 26, it imposed 20 per cent export duty on shipments of parboiled rice. However, the government clarified that it will allow exports to neighbouring and vulnerable countries.

Last year, kharif rice production was affected as key growing regions such West Bengal, Odisha, Jharkhand and western Uttar Pradesh received deficient rainfall. 

This year, too, kharif sowing was affected due to the south-west monsoon playing truant and August turning out to be the driest in over 122 years. 

During the 2022 kharif, rice production was estimated at 110.51 million tonnes (mt), while this year it is projected at 106.31 mt by the Ministry of Agriculture. QR Code

Published Date: November 20, 2023

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