Export ban on non-basmati white rice lifted: why, what are the likely impacts

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Last Updated03/10/2024

The government had removed the 20% export duty on Non-Basmati White rice, and halved export duty on three other categories of rice.

On September 28, the Indian government lifted the export ban on Non-Basmati White Rice, while setting a minimum export price (MEP) of $490 per tonne. The move follows the government's earlier decision to remove the 20% export duty on Non-Basmati White Rice and to halve export duties on other categories of rice.

The initial export ban was imposed last year due to a slight drop in rice production and concerns about an unpredictable monsoon. This year, however, the situation has improved with higher paddy sowing and expectations of a bumper crop. Key factors include:
Increased Sowing: Paddy sowing during the kharif season has increased by 2.2% compared to last year, driven by favorable monsoon conditions. As of September 20, the area under paddy cultivation was 413.50 lakh hectares, with notable increases in states like Uttar Pradesh, West Bengal, and Bihar.
Record Production: India’s rice production is expected to reach 137.82 million tonnes in 2023-24, up 1.5% from last year, with kharif output contributing 113.26 million tonnes.
Declining Wholesale Prices: Wholesale prices of rice have decreased, dropping from ₹3,597.09 per quintal a week ago to ₹3,324.99 per quintal on September 27. However, retail inflation remains a concern, with Consumer Price Index-based inflation in rice staying in double digits for 18 months, before settling at 9.52% in August.
Surplus Stocks: The Food Corporation of India reported that rice stock in the central pool stood at 323.11 lakh tonnes on September 1, well above the required buffer stock norms.

The lifting of the ban is expected to benefit exporters and farmers, especially those growing premium Non-Basmati rice varieties like Sona Masoori, which had been impacted by the export restrictions. Prior to the ban, Non-Basmati White Rice made up 25% of India’s total rice exports. This move will revive export sentiment and reduce the burden of the earlier 20% duty on traders.

While the move may boost exports, it could lead to higher domestic retail prices for rice, which are already elevated.

Yes, some rice exports continued under special permissions. The government allowed exports to meet the food security needs of countries like the UAE, Bhutan, Singapore, Nepal, and others. The rice was exported through the National Cooperative Export Limited (NCEL).

India is the world’s largest rice exporter, accounting for 33% of global rice exports in 2023. India, along with China, dominates global rice production, though China is the largest consumer and exports less.

India’s main competitors are Thailand and Vietnam, whose combined exports were nearly equal to India's in 2023. Other notable exporters include Pakistan, Cambodia, and the United States.