The Curb on india’s rice export

• Recently the Ministry of Finance notified the 20% duty on exports of rice(Except parboiled and basmati rice) and imposed a blanket ban on broken rice exports.
• Earlier exports of wheat were banned from the country due to unexpected crop failure resulting in low procurement and depletion of public stocks.

How much would all this impact the country’s overall rice exports?

• 2021-22: India Exported a record 21.21 million tonnes (mt) of rice valued at $9.66 billion.
• Basmati Rice: 3.95 mt worth $3.54 billion (on which there are no restrictions)
• Non Basmati Rice: 17.26 valued at $6.12 billion.
• The restrictions apply only in respect of the balance 9.83 mt ($3.36 billion).
• Broken Rice: 3.89 mt ($1.13 billion), whose exports have been prohibited.
• Non-parboiled non-basmati rice: 5.94 mt ($2.23 billion) of, whose shipments will henceforth attract 20% duty.

Why have these restrictions been placed?

• Declining India’s rice production due to deficient monsoon rainfall in Uttar Pradesh, Bihar, Jharkhand and Gangetic West Bengal.
• Decline in plantation Area
• Expected lower yield in Punjab and Haryana due to a new virus that has caused “dwarfing” of paddy plants in many fields there.
• Public wheat stocks were the lowest in 14 years in August.
• Rice was quite comfortable, the government is worried about their depletion in the event of a sub-par kharif harvest
• Political pressure to continue the free-foodgrains scheme (PMGKAY) beyond September. With very little wheat in government godowns, it is rice that is sustaining the public distribution system (PDS).

How important is India to the global rice trade?

• India accounts for 40% share of the world’s total rice exports, with its 21 mt-plus shipments last year way ahead of Thailand’s (7.2 mt), Vietnam’s (6.6 mt) and Pakistan’s (4.8 mt).
• Thus, India matters to the global trade in rice – unlike in wheat, where it is only an occasional large exporter.

Where does India export rice to?

• More than 75% of basmati exports: Iran and the Arabian Peninsula countries; the US, UK, Canada and Australia added up to another 10%.
• Non-basmati rice: 55% went to African countries – including Benin, Ivory Coast, Senegal, Togo, Guinea, Madagascar, Cameroon, Djibouti, Somalia and Liberia.
• Much of exports to Africa and Bangladesh consist of parboiled rice, while China’s imports were predominantly broken rice that has now been banned.

Now, what exactly are parboiled and broken rice?

• Paddy typically has 20-21% husk (the inedible covering of the grain) and 10-11% bran (the brown outer layer of the edible kernel).
• The milled rice, in turn, has both whole and broken grains.
• Parboiling: Paddy is soaked in water, steamed and dried while retaining its outer husk.
• It results in the rice becoming harder with less breakage on milling.
• The parboiled rice exported from India contains 5-15% broken grains.
• In raw rice, the brokens are normally up to 25%. It is the rice having 100% brokens whose exports have been prohibited.

Will India’s rice exports take a massive hit?

• White rice with 5% brokens from India is currently being shipped out of India, a 20% tax isn’t going to render Indian rice uncompetitive.
• The ban on shipments of broken rice – inferior grain mainly used for animal feed and also as ethanol feedstock – may be part of a larger crackdown.
• Therefore, it is not going to disturb the global food grain supply chain that may hamper food security in the global scenario.