Indian Rice Exporters Face Pressure as African Importers Seek Duty Waivers
The importation of Indian rice via government-to-government (G2G) deals has sparked a plea from African countries seeking exemptions from customs duty, which escalates the landing cost by a significant $80 per tonne.
A recent move by Indian customs officials imposing a 20% duty on white rice shipments weighing 5,300 tonnes from Visakhapatnam port to Port Louis in Mauritius has triggered concerns among the main beneficiaries of these G2G deals—primarily African nations.
The imposition of an export duty on white rice consignments moving through G2G arrangements has prompted importers to question the rationale behind these tariffs. "Some of the buyers who are getting rice through G2G deals are arguing why India should impose an export duty for such deals," voiced an exporter anonymously.
Official sources clarified that while white rice exports operating under G2G deals face a 20% export duty, consignments to countries engaged in a Free Trade Agreement (FTA) with India enjoy duty-free status. "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," explained an exporter.
In a bid to streamline these exports, the government had earlier authorized the export of 10.34 lakh tonnes of non-basmati white rice to seven countries through G2G channels. The National Cooperative Export Ltd (NCEL) was mandated to oversee these shipments, marking an effort to bolster cooperatives in the export sector.
However, the imposition of duties on these exports has triggered dissatisfaction among some trade factions. "Despite the fact that farmer producer organisations and farmers, from whom NCEL will procure, stand to gain, Customs authorities are imposing a duty," expressed an exporter.
NCEL has already executed exports to Mauritius and Bhutan while actively negotiating deals with the Philippines, Seychelles, Cameroon, and Singapore. The 20% duty on rice exports has led to an increase of $80-85 per tonne in the landing cost, proving burdensome for some of the economically challenged African nations.
The increased duty aligns with India's efforts to stabilize domestic food security, particularly following adverse weather affecting wheat production in recent years. The ban on broken rice exports, the imposition of export duties on white and parboiled rice, and the restrictions on rice exports are part of these measures to address domestic supply concerns.
Severe weather conditions impacting kharif rice production in key regions like West Bengal, Odisha, Jharkhand, and Uttar Pradesh have further compounded these challenges. With rice production estimated at 106.31 million tonnes for the current year, down from 110.51 million tonnes in 2022, the government remains cautious about export allocations.
While these measures aim to secure domestic food supplies, the additional duty on rice exports has inadvertently inflated prices in African nations, particularly impacting major importers like Benin, Senegal, and Cote d’Ivoire.
As stakeholders navigate the complexities of international trade and domestic food security, the debate over export duties on essential food items continues to evoke concerns among both exporters and importers, adding a layer of complexity to global trade dynamics.