Addressing Export Duty Structure
The Commerce Ministry is expected to present a proposal to the Amit Shah-led Committee of Ministers (CoM) on food prices to revise the export duty structure for parboiled non-Basmati rice. The proposal aims to address the industry’s demand for a fixed absolute duty of $0,09/kg and to reduce the minimum export price (MEP) of Basmati rice from the current $0,95/kg to $0,85/kg.
Rice industry representatives from various export bodies met with senior officials of the Commerce and Finance Ministries on June 19 to discuss these issues. An exporter who participated in the meeting stated, “While importers are contracting at a price inclusive of the export duty, the government insists on levying a 20 per cent duty on the contracted price.” Currently, the free-on-board (f.o.b) price at Kakinada, including the 20 per cent export duty, is about $0,55/kg. Exporters find it challenging when the Customs Department demands duty payments based on this price.
Fixed Duty and MEP for White Rice Exports
Exporters have requested that shipments of white rice be permitted by setting an MEP of $0,50/kg and a fixed export duty of $0,10/kg. This measure aims to stabilize the market and prevent under-invoicing by exporters with offices or firms abroad.
However, another exporter noted that the government has reservations about lowering the Basmati MEP since the average price has been over $1/kg since October 2023, following the new crop arrival. The Government is cautious about opening up white (raw) rice exports due to ongoing concerns about rice inflation. Until inflation is brought under control, export restrictions are likely to continue.
Fluctuating Prices and Export Growth
Trade sources indicate that the average monthly Basmati export price was $1,13/kg in February, dipping to $1,10/kg in May, with further declines expected this month. Despite price fluctuations, Basmati rice exports saw a 14 per cent increase in April, reaching $0,53 billion compared to $0,47 billion in the same period last year. In volume terms, exports grew by 17 per cent to over 0.5 million tonnes (mt) from 0.43 mt a year ago. Throughout 2023-24, shipments increased by 15 per cent, hitting a record 5.24 mt.
The Commerce Ministry’s proposal to the inter-ministerial panel aims to address the industry’s concerns regarding export duties and MEP for parboiled non-Basmati and Basmati rice. While the Government remains cautious about lifting restrictions on white rice exports due to inflation concerns, the ongoing discussions and potential adjustments highlight the efforts to balance market stability and export growth.