Located in Asia, India is the second largest rice producer in the world ranking behind China and the Asian nation occupies the top spot when it comes to rice exports. Different varieties of Indian rice enjoy great demand worldwide and more than 150 countries around the world depend upon India for their rice needs. Owing to strong demand and bumper harvest, India commands a mammoth 40% share in the global rice trade and hence any disruptions from Indian rice millers and exporters raise troubles for many in the global market.
The same has been the case in 2022 as well. Back in September, the Government of India banned the exports of broken rice and imposed a 20% duty on all varieties of non-basmati rice except parboiled rice, with a view to stabilize domestic prices and ensure adequate supplies for domestic consumption.
The GOI’s move added to the woes as countries around the world were already struggling to meet their domestic needs in the aftermath of the Russia-Ukraine war which drove food and fuel prices to record levels.
However, adverse monsoon rainfall in rice producing states of India that hampered the domestic paddy production, left the government with no better option.
But, as it seems, there would be some relaxations in rice export curbs and authorities are actively discussing in this regard as prices of rice are stable for quite a while in the domestic market. If things proceed on the right path, the move would further ease inflationary pressures in a world that has adopted food protectionism approach in the aftermath of Russia-Ukraine war.
Adequate Stock To Meet Domestic Needs
As per market information, government stockpiles are sufficient to meet the rice needs of welfare programs run by the GOI and hence some relaxations in rice export curbs appears to be on cards.
Considering the situation, The Rice Exporters Association (TREA) believes that the Government will ease some of the restrictions that it imposed on rice exports in the month of September. B.V. Krishna Rao, president of The Rice Exporters Association (TREA), said “the industry group will seek approval to ship at least 1 million tons of broken rice and request that the 20% tax on white rice exports be removed.”
Easing Of Inflationary Pressures, Relief To Exporters
Stable domestic prices and adequate stocks for welfare schemes run by the government indicate that the authorities will soon relax the restrictions that are currently in place for rice exports and a discussion in this regard is fueling hopes in the market.
If that happens, this would serve as a boon for nations importing rice from India as they would no longer need to struggle for their domestic rice needs.
Also, the rice exporters and millers of India would be benefitted as relaxation in curbs would again make Indian rice competitive in the global market thereby generating sources of revenue for them.
The Bottom Line
India is the largest rice exporter in the world occupying a mammoth 40% share in the global rice trade and any disruption from India reflect directly on prices of rice across the globe. The same has been the case last year as well, when GOI curbed rice exports to stabilize prices and ensure adequate supplies.
However, with positive indicators on domestic front, India may soon give relaxations in restrictions that it imposed on exports of rice out of country and a decision in this regard is highly anticipated.
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