India commands the global rice trade by holding a 40% share of the total rice trade. In an attempt to boost domestic supplies, the Government of India imposed a 20% export duty on all varieties of non-basmati rice except for parboiled rice. The policy was announced on 8thSeptember’22 and came into effect from 9thSeptember’22. The sudden nature of the decision led to the blockage of several shipments of rice at Indian ports.
Reasons For Imposition Of The Duty
India changed its export policy and imposed a duty because of: ● Inflation of the cost of rice due to lower production.
- Maintaining buffer stock for Pradhan Mantri Garib Kalyan Anna Yojna(PM-GKAY).
- Government’s ethanol requirement for blending fuel
The primary reason could be lower paddy acreage due to the slow advancement of the monsoon in June and uneven spread in July in some key growing areas in the country. India exports rice to more than 150 countries and any reduction in shipments would create upward pressure on food prices around the world, which are already on a rise owing to drought, heatwaves, and the war between Russia and Ukraine.
Relief Following Gujarat High Court Order
In Gujarat, rice exporters are taking heart from a Gujarat High Court order which granted interim relief to an exporter who had challenged the duty related to the exports of non-basmati rice on the grounds that the shipping bills in relation to his orders were registered before 8thSeptember’22, the time when the 20% duty was imposed.
The Gujarat High Court followed an Andhra Pradesh High Court judgment in which the court last month allowed three Rice Exporters to ship out rice, but subject to certain conditions.
Hundreds and thousands of tonnes of rice got stuck at ports due to the Union Government’s decision to regulate rice exports owing to domestic food security concerns.
“Merely because the goods could not be sailed in the vessel, the customs authorities were not justified in talking to levy the duty,” the Gujarat HC stated.
The rice consignments which were destined for Ghana were of Kunvarji Comtrade. Vinod Kaul, Senior Executive Director of All India Rice Exporters Association stated that the company had argued that its goods were inspected and allowed for ‘Let Export’ by the customs on 5thSeptember’22. As per him, the Interim order could just be temporary and could go either way and the exporters would have to repay the duty if the decision goes in the favour of the government and the justification that they give. In the rice business, the shipping bills are made much earlier than the actual shipments, and thus the final decision yet to be made is still unknown.*
Ajay Sahai, Director General of the Federation of Indian Export Organisations said that the orders taken by high courts will be applicable to those states only, as in the case of Gujarat and Andhra Pradesh and other exporters in the same region would be able to take the benefit of the same. He further said that it is important to see whether the Government would challenge the orders.*