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Indian Parboiled Rice Exports Slowed by Confusion Over Duty Calculations

Parboiled Rice Export

Indian traders are experiencing a slowdown in new contracts for the export of parboiled rice due to confusion stemming from recent changes in duty calculation methods by customs officials. The alteration in the calculation method for the 20% export duty has resulted in a higher duty, causing hesitation among traders and buyers alike.

In August of last year, India, known as the world's largest rice exporter, implemented a 20% duty on parboiled rice exports. This decision followed a ban on white rice exports aimed at controlling domestic rice prices in anticipation of key state and national elections in 2024. Previously, the 20% duty was applied to the Free on Board (FOB) value. However, customs authorities now require the duty to be calculated based on the transactional value, leading to a notable increase in costs for exporters.

The consequences of this change were felt swiftly in the market. Exporters, this week, were offering the 5% broken parboiled variety at approximately $450, excluding duty. However, with the imposition of duty, the price soared to a record high of $560, effectively translating to a customs duty of more than 24%. This significant increase has hampered the competitiveness of Indian parboiled rice in the global market.

While the 20% duty has undoubtedly slowed India's parboiled rice exports, traders are still managing to ship around 500,000 metric tons per month. This is primarily due to the surge in prices in competing countries such as Thailand, Vietnam, Pakistan, and Myanmar. However, exporters have faced challenges in renegotiating existing contracts due to the sudden hike in duty costs resulting from the revised calculation method.

Exporters have found themselves obligated to pay higher duties for already signed contracts in recent weeks, as a result of the new duty calculation methodology. Buyers, reluctant to bear the additional cost, have resisted renegotiating prices, placing the burden squarely on sellers. Despite efforts to convince buyers to agree to the revised terms, resistance persists.

India primarily exports parboiled rice to African countries such as Benin, Djibouti, Guinea, Liberia, and Togo. However, the confusion surrounding duty calculations has complicated trade negotiations, prompting calls for government intervention to streamline the process.

To address the confusion and restore confidence in the market, stakeholders are urging the government to implement a flat duty of approximately $100 per ton on parboiled rice exports. Such a measure would not only simplify the calculation process but also ensure a level playing field for exporters and buyers alike.

In conclusion, while India's parboiled rice exports continue, albeit at a slower pace, the recent changes in duty calculations have introduced uncertainty and complexity into the market. It is imperative for policymakers to take swift action to resolve these issues and facilitate smoother trade operations in the future.


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