Exporters halt consignments over 20% new duty

MUMBAI:

India’s move to impose a 20% duty on exports of parboiled rice has prompted buyers and sellers to postpone shipments of around 500,000 metric tonnes to after mid-October to avoid paying the tax, three leading exporters said on Tuesday.

The delay in shipments from the world’s biggest exporter of rice could deplete inventories in importers such as Benin, Ghana, Côte d’Ivoire, and Liberia, and boost local prices in those countries, which are already near multi-year highs.

India, which is scrambling to rein-in inflation ahead of state elections later this year, on Friday expanded curbs on rice exports with a 20% duty on parboiled rice that would be effective until Oct 15.

“Buyers are postponing the shipments; nobody is willing to pay the duty,” said Himanshu Agarwal, executive director at Satyam Balajee, an exporter.

Shipments of around 500,000 tonnes have been put on hold, said BV Krishna Rao, president of the Rice Exporters Association (REA).

Indian exporters were offering 5% broken parboiled variety last week at $450-$455 per metric tonne, but since then have raised prices to a record $520 to $540, exporters said, up nearly 40% from a year ago.

“Even before India imposed the duty, buyers were uncomfortable with the rising prices. Buyers from African countries can’t afford to buy at the current price level,” said Rao.

Supplies will improve once harvesting of the summer-sown crop starts from October, which will bring down local paddy prices and eventually export prices of rice, Rao said.

Importing countries have few options since other big producers Thailand, Vietnam and Pakistan have raised prices in recent weeks, said a New Delhi-based dealer with a global trade house.

Published in The Express Tribune, August 30^th, 2023.

Published Date: August 30, 2023