Basmati rice export below $1,200/tonne banned by Centre

Scalded by the fast rise of inflation figures, the Centre has decided not to leave any loophole in its curb on export of non-basmati rice and has proceeded to halt all rice shipments below the floor price of $1,200/tonne. The restriction would remain in force till October 15. The reason: prevent shipment of white non-basmati rice under the garb of basmati rice.
In a statement on 27 August, the Union commerce ministry pointed out that it has told Agricultural and Processed Exports Development Authority (APEDA) not to register any contract below $1,200 per tonne.
On August 27, the government slapped a 20% export duty on parboiled rice. On July 20, the export of white, non-basmati rice was banned.
The logic of enforcing the minimum export price till mid- October is that it would allow the government time to get an idea of the kharif rice production.
“The government has received credible field reports regarding mis-classification and illegal export of non-basmati white rice, export of which has been prohibited with effect from July 20, 2023… to check the domestic prices and to ensure food security, the government has been taking measures to restrict export of rice from India,” the ministry said on August 27.

Industry executives expressed surprise at the move. “The move has been sudden and unexpected. The rice exporters will face huge losses as many consignments are ready to be shipped,” said Vinod Kaul, executive director of All India Rice Exporters’ Association.

Rice exports in FY24 so far has risen by more than 15% to 7.33 million tonne (MT) compared to the corresponding period of FY23.

The government has taken a series of flurry of measures to curb export of food items such as rice, wheat, onions. It has also announced abolition of import duties on certain varieties of pulses. All the measures are designed to increase supply of these essential items in the domestic market and rein in food inflation.

Food Corporation of India also reportedly wants to sell 25 lakh tonnes of rice in the open market to cool prices.

Retail inflation climbed to 7.44% in July, springing a nasty surprise on the policymakers. It was fuelled mainly by food inflation that rose to 10-month high of 11.51% in the same month driven by higher prices of vegetables, cereals and pulses.

It was calculated that vegetable prices alone contributed 200 basis points to the retail headline inflation in July. The ceiling of RBI’s comfort level is 6% while the bank aims at containing inflation at 4%.
Retail rice prices rose by 12.96% in July and have been rising in double digits since the beginning of the year.