India Removes 20% Duty on Paddy Export to Nepal

India Removes 20% Duty on Paddy Export to Nepal

The government of India, in an attempt to address the food security of Nepal, permitted the duty-free export of 600,000 tonnes of paddy to the Himalayan nation. 

Last month, India curbed the exports of broken rice and imposed a 20 percent import duty on non-basmati rice amid spiraling domestic prices and shortages in reserves. 

However, India has permitted duty-free rice exports which could be seen as India’s political move to get Nepal away from further strengthening its ties with China. 

Export of rice (both basmati and non-basmati) increased by 19 percent to US$5.5 billion from $4.6 billion in the first half of the current fiscal. Non-basmati rice shipments during the period have been pegged at 8.95 mt, almost at par with the year-ago period. 

Rice Exporters Relieved 

The notification should come as a relief to rice exporters since shipments of rice, particularly steamed rice, got held up after India restricted the grain’s exports from September 9. 

Nepal is a major rice consumer and rice importer and it Buy Rice in Bulk from India. It imports nearly 1 million tonnes of steamed rice on an annual basis. Its shipments had got held up after Customs authorities treated it as white rice. However, the Food Corporation of India clarified that steamed rice does not fall under the category of raw rice, since it was being treated.

In another significant development, the Finance Ministry of India has permitted duty-free exports of organic non-basmati rice. The analyst said this was a move to promote the export of organic products by the Centre. 

Eliminating Ambiguities 

The Finance Ministry notification has removed all ambiguities on permitting exports of rice, which are curbed or attract export duty. It said broken rice shipments would be permitted if the exporter had obtained a letter of credit (LoC) before September 9. 

However, The Rice Exporters Association (TREA) said the notification had missed a crucial issue by not adding “or” in the notification that allowed duty-free permits of shipments for which LoCs had been opened before September 9. According to BV Krishna Rao, the notification should have said duty-free exports of white and fully broken rice would be allowed if the LoCs had been opened before September 9 “and/or the consignments had entered the container freight stations”. 

The missing “or” could now pose problems for consignments that have valid LoCs but had not entered any Container Freight Station before September 9. Efforts are on to get the issue rectified. 

The decision was made, particularly, after the area under paddy during the Kharif season dropped by over 5 percent in view of deficient rainfall in key growing regions in West Bengal, eastern Uttar Pradesh, Odisha, and Jharkhand. 

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