WHAT HAS HAPPENED ?
India has banned exports of broken rice and imposed a 20% duty on exports of non-Basmati rice except for parboiled rice, To boost domestic supplies amid a fall in area under the paddy crop in the current Kharif season.
Some exports will, though, be allowed till September 15, Including for where loading of broken rice on the ship has commenced before this ban order, Where the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated, and Where broken rice consignment has been handed over to the customs and is registered in their system.
WHY IS INDIA SO CRUCIAL ?
India's rice exports touched a record 21.5 million tonnes in 2021, More than the combined shipments of the world's next four biggest exporters of the grain: Thailand, Vietnam, Pakistan and the United States.
India, the world's biggest rice consumer after China, has a market share of more than 40% of the global rice trade.
High domestic stocks and low local prices allowed India to offer rice at deep discounts over the past two years, helping poorer nations, many in Asia and Africa, grapple with soaring wheat prices.
India exports rice to more than 150 countries, and any reduction in its shipments would fuel food inflation.The grain is a staple for more than 3 billion people, and when India banned exports in 2007, global prices shot to new peaks.
BUT WHY BAN NOW ?
The ban on exports assumes significance as it appears that the overall sown area under paddy this Kharif season could be lower than that of last year.
The area under the paddy crop has been down by 5.62% at 383.99 lakh hectares in the ongoing Kharif season so far due to poor rains in some states, as per the latest data released by the agriculture ministry.
India, the world's second-largest rice producer after China. This can have an impact on both crop prospects as well as prices going forward.
The country exported 21.2 million tonnes of rice in the 2021-22 fiscal year, of which 3.94 million tonnes were Basmati rice.
It exported non-Basmati rice worth USD 6.11 billion in the same period, as per official data.
IMPACT OF THE BAN ON OTHER COUNTRIES
The new duty is likely to discourage buyers from making purchases from India and prompt them to shift towards rivals Thailand and Vietnam, which have been struggling to increase shipments and raise prices.
The duty will affect white and brown rice, which account for more than 60% of India's exports, said B.V. Krishna Rao, president of the All India Rice Exporters Association.
"With this duty, Indian rice shipments will become uncompetitive in the world market. Buyers will shift to Thailand and Vietnam."
India has been cheapest supplier of rice by huge margin and that shielded African countries such as Nigeria, Benin and Cameroon, To an extent from a rally in wheat and corn prices, said a Mumbai-based dealer with a global trading firm. China was the biggest buyer of broken rice, with purchases of 1.1 million tonnes in 2021.
WHEAT BAN
Earlier in May, the Centre amended the export policy of wheat by putting its export under the "prohibited" category on possible risks to food security.
The government while banning exports of wheat had stated that the move was made with the purpose, To manage the overall food security of the country as well as meeting the needs of the neighbouring and other vulnerable countries.
The Indian government did not stop at just restricting exports of wheat.
After a ban on exports of wheat grain, the Centre then put restrictions on the exports of wheat flour (atta) exports and other related products like maida, semolina (rava/sirgi), wholemeal atta and resultant atta.
CONCLUSION
Prices in India too are buoyant and are currently trading above the minimum support price.
