India Considers Extending Export Tax on Parboiled Rice

Thursday February 08, 2024 - 18:57:35
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Staff Reporter
New Delhi (diplomat.so) - India, the world's leading rice exporter, is contemplating an extension of the export tax on parboiled rice in a bid to alleviate food inflation ahead of the upcoming national elections. The government, led by Prime Minister Narendra Modi, is reportedly considering maintaining the export levy at 20%, according to sources familiar with the matter.
The discussions come amidst concerns of tightening global rice supply and potential price hikes, with no immediate plans to prohibit parboiled rice exports. The current tax, set to expire on March 31, might be extended, potentially impacting benchmark Asian rice prices, which have been nearing a 15-year high since India imposed restrictions on key varieties in 2023.

Countries in West Africa and the Middle East, heavily reliant on India for their rice needs, could face challenges if the export tax is prolonged. However, officials from both the food and commerce ministries declined immediate comment on the matter.

The prospective extension aligns with the government's robust measures to combat food inflation, which escalated to nearly 10% in December compared to the previous year. India has already restricted exports of wheat, sugar, and most rice types while intensifying efforts against hoarding. Additionally, it has prolonged low import duties on edible oil for another year.

Despite these efforts, rice prices in Delhi remain approximately 11% higher than a year ago. In response, Food Minister Piyush Goyal initiated a subsidized rice program nationwide on Tuesday, complementing existing initiatives offering discounted wheat flour and chickpeas.

B.V. Krishna Rao, President of the Rice Exporters Association, noted that such measures could stabilize domestic prices and generate additional revenue for the government.

Government data revealed a 29% decline in India's total rice exports to 12.3 million tons between April 1 and January 21, with parboiled rice shipments decreasing by 6.5% to 5.8 million tons during the same period. Parboiled rice, constituting approximately 30% of India's total exports prior to the restrictions, undergoes partial boiling before milling to enhance nutritional value and alter the cooked rice's texture.

In the 2022-23 period, India held a 40% share in the global rice trade, reinforcing its pivotal role in the international market.

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