Lifting the Ban
The Rice Exporters Association (TREA), a significant body representing non-basmati rice exporters, has made a compelling plea to the Indian Government. They propose lifting the ban on exports of broken and white rice, suggesting instead the imposition of a fixed duty on these exports. This strategic shift aims to stabilize the market, control inflation, and generate revenue for the country.
Proposal for Fixed Duty on Rice Exports
TREA has formally requested the Indian Government to lift the current ban on the export of broken and white rice. In a letter to the Food Minister, the TREA President emphasized the benefits of this move. He highlighted that permitting these exports with a fixed duty could help streamline the market while ensuring a steady revenue stream for the government. In addition to these, TREA has called for a fixed duty on the export of parboiled rice. A fixed duty would provide greater predictability and stability for exporters and the government alike.
Addressing Surplus and Subsidy Burden
TREA represents 80% of non-basmati rice exporters in India. They point out that the Food Corporation of India (FCI) holds nearly four times the required buffer stocks. By reducing these surplus stocks, the government can alleviate its subsidy burden. This is particularly relevant for decentralized procurement states such as Telangana, Chhattisgarh, and Orissa, which often pay bonuses over the minimum support price (MSP) set by the Centre. To further manage surplus and reduce costs, TREA suggests auctioning paddy procured above MSP to traders. This would cut down on storage and milling expenses. Additionally, the FCI could auction rice under the open market sales scheme to help control domestic prices.
Short-term and Long-term Measures
In the short term, lifting the ban on white and broken rice and imposing a fixed duty could help control inflation. TREA suggests that export duties could be a viable solution. This measure would not only stabilize prices but also provide the government with additional revenue, which could be used for price stabilization efforts. For the long term, TREA advocates for zero export duty on all types of rice. They argue that bonuses offered by some states for paddy procurement above MSP lead to abnormal price increases in the global market. Eliminating export duties would help maintain competitive pricing internationally.
Recommendations and Additional Proposals
TREA has also recommended scrapping the Bharat Rice scheme, which was designed to control domestic prices. The association contends that the rice procured under this scheme is being returned to FCI warehouses, negating its intended purpose. They propose treating steamed rice varieties, like Sona Masuri, as parboiled rice. This would prevent export bans on these varieties, which are predominantly consumed by the Indian diaspora. Currently, only 0.4 million tonnes of such rice are exported, making this a feasible adjustment.
TREA’s proposals offer a strategic approach to managing India’s rice exports. By lifting the ban on broken and white rice and imposing a fixed duty, the government can address surplus stocks, reduce subsidy burdens, and generate additional revenue. In the long term, adopting a zero export duty policy could help India remain competitive in the global market. Implementing these measures could provide stability and growth for India’s rice export sector, benefiting both exporters and the broader economy.