20% Export Duty on Parboiled Rice Likely to be Extended Till End of FY24
New Delhi, October 6, 2023 - The Indian government is reportedly considering an extension of the 20 percent export duty on parboiled rice until the end of the financial year 2023-2024. This move comes in response to concerns about rising food prices, particularly those of staples like wheat, rice, and vegetables, which contributed to headline inflation reaching 7.8 percent in July. India, the world's largest rice exporter, is a significant player in the global rice market, accounting for nearly 40 percent of the world's rice trade in 2022. The country exported a substantial 22 million tonnes of rice to 140 countries last year. The export duty on parboiled rice was initially imposed on August 25 as part of measures to stabilize food prices. Officials noted that its continuation is contingent on the size of the upcoming harvest and the need to prevent excessive exports that could lead to price hikes. One government official commented, "The duty was put in place to dissuade exporters from exporting huge amounts of the commodity as prices increased. Any decision to roll it back was to be based on the size of the upcoming harvest. These export curbs have helped keep prices in check. If any leeway is given now, prices may rise." It's worth noting that parboiled rice has an annual consumption of only 2 million tonnes in India and is not part of the Public Distribution System (PDS). In response to persistent high inflation, which reached 7.8 percent in July, the Indian government has taken various measures to control retail rice prices. These measures include banning the export of broken rice in September 2022 and halting non-basmati white rice exports in July. Despite these efforts, rice prices remain stable, and the Food Corporation of India is reportedly holding rice stocks at three-year lows. Additionally, concerns about the kharif output have further bolstered the government's resolve to maintain export duties on parboiled rice. As India continues to balance its role as a major rice exporter with the need to stabilize domestic food prices, the extension of the export duty on parboiled rice is seen as a key measure in maintaining price stability and ensuring food security in the country.