Exporters say they incur $70/tonne additional costs; Customs officials playing safe to verify if shipments are white or parboiled rice.

By Subramani Ra Mancombu

India’s white and parboiled non-basmati rice consignments are being held up at major ports by customs authorities despite the government easing the curbs on shipments from the country. 

According to trading sources, the consignments are held up at the container freight stations (CFS) to ensure that parboiled rice is not exported in the garb of white rice to dodge the 10 per cent export duty. “The situation is opposite to what it was before the Centre eased the curbs last month-end,” said an exporter, who did not wish to identify.

Change in situation

Until the end of September, Customs authorities held up parboiled consignments to check illegal shipments of white rice, which was banned since July 2022. 

On September 27 and 28, the Centre came up with the crucial decision to ease the restrictions on rice exports. First, it reduced the duty on parboiled rice exports to 10 per cent from 20 per cent besides making the duty on white rice zero. Next, it allowed exports of white rice. Earlier in mid-September, the Government scrapped the $950/tonne minimum export duty on basmati rice. 

Customs authorities are carrying out tests to ensure parboiled rice is not shipped out as white rice. White rice in the global market is quoted at $491-495 and parboiled is quoted above $500 free-on-board. Since officials suspect that attempt could be made to ship out parboiled as white rice without duty being paid, they are testing if the rice is white as claimed by the shippers. 

Nearly 10 days delay

Exporters said the hold led to a delay of nearly 10 days of the export consignments, besides leading to $70-80 a tonne additional costs. They say this is, particularly, affecting small and medium exporters. “When we take our rice consignments to any port, the container is offloaded at the CFS. Customs authorities draw samples from the container and until the results of the tests come the container is held up at the CFS,” said an exporter.

Exporters said it takes at least three days for the results to come from the lab if it is a major city such as Chennai. If it is Kakinada or Vizag port, then it takes an additional 2-3 days. “We have to pay ₹7,000 to keep our consignment in CFS for nine days. Mostly, we find we have to pay additional money since the tests don’t get done by this period,” said an exporter from Kakinada. 

Risks involved

In the case of big exporters, the CFS does not charge them additionally since they are giving them continuous business, he said. 

Another exporter in Chennai said rice shippers are beginning afresh after the ban was lifted on white rice exports. A delay at this time could cost them. “The additional costs that we have to incur itself will make exports unfeasible. And there are chances of the consignments missing the ship,” he said. 

Another exporter said those permitted to examine did not know how go about carrying out the tests. This is resulting in “needless delay”, he said.

In July 2023, the Government imposed a ban on exports of white rice due to fears that deficient rainfall would affect rice production. This was after it imposed a 20 per cent export duty in September 2022. In August 2023, the government imposed the 20 per duty on parboiled, brown and husked rice after the emergence of El Nino resulted in deficient rainfall in key paddy-growing areas.  

Published Date: October 9, 2024