Rice Export Ban

 

India, the second largest producer of Rice in the world after China has announce ban and imposed a 20 per cent duty on export of all varieties of rice, except basmati and parboiled rice, with effect from 9 September 2022.

This move was expected by most of the exporters that government will impose ban on broken rice completely, but imposing duty of 20 per cent on other varieties of rice which include mainly Raw rice was a shocking move.

In international rice export market, India faces competition mainly from Pakistan, Vietnam and Thailand and duty on Raw rice will make it almost uncompetitive in market and buyer will look purchasing from other our rice rival countries.

If we bifurcate total export of Indian Rice for FY 2021-22, it is like

Total export of Rice is 21.21 Million Tons

Export of Basmati Rice 3.95 Million Tons

Export of Non Basmati Rice 17.26 Million Tons (Which includes 7.43 Million Tons Parboiled Rice + 3.89 Million Tons Broken Rice + 5.94 Millon tons Non- Parboiled Rice i.e. Raw Rice)

Now, impact will be on Broken Rice and Non-parboiled Rice where Broken Rice is completely banned and there is a duty of 20% will on Non- Parboiled Rice i.e. Raw Rice. In quantitative term there will around fifty percent affect on total rice export.

Difference between Raw Rice and Parboiled Rice

Rice is produced after milling of paddy grain. Paddy grain constitute of Husk and Bran. Husk is the cover of grain which is not edible is around 20% of the Paddy grain and Bran the outer of Kernel which is in brown color is around 10% of the kernel.

When paddy is milled and husk and bran is removed white raw rice is obtain.

When paddy is soaked in water, steamed and dried is called parboiling process. In milling husk is removed and the outcome is parboiled Rice

  

Destination of Indian Rice Export

Basmati Rice – India’s export to Basmati Rice is majorly consist of Arabian Countries, Iran, US, Canda, UK

Non- Basmati Rice – Major consumer of Indian Non-Basmati Rice is African Countries like Benin, Ivory Coast, Togo, Guinea, Madagascar, Djbouti, Somalia, Cameroon. Bangladesh and China are also importer of Indian Rice. Bangladesh and African countries are importer of Parboiled Rice where as China mainly imports broken rice from India. There are few African countries those who are importing broken and raw rice as well.

 Various factors for placing restrictions

1.      It is apprehended that rice production in India will go down sharply as the plantation for Kharif crop season is substantially less than previous year.

2.      Broken rice is used for Ethanol production and cattle feed. There was a huge jump in export from India to China for broken rice year to year basis. Due to which a shortage of broken rice created in India. There was around 27 per cent rise in per kg broken rice from Jarnuary.

3.      Blending of Petrol with ethanol is not sufficient with sugar based feedstock and substitute like maize and broken rice is required for this.

4.      Increasing price of broken rice in Indian domestic market we putting impact on poultry and animal husbandry sectors.

Assuming above factors Government of India may have decided to put a total ban on broken rice and levying export duty 20 percent on Raw rice.

However, it is bound to impact domestic export companies which are mainly in export of Rice. Main concern of exporters are the good they have on Port and Warehouse. Such situation was seen in the time of wheat ban.

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