Centre cuts export duty on parboiled rice to 10%

New Delhi: Facing storage challenges with granaries filled from last year’s paddy stock and the new crop procurement set to begin on 1 October, the government late Friday night reduced the export duty on parboiled rice to 10% from 20%. The move is aimed at easing the storage burden and boosting India’s rice exports in the global markets.

A notification from the department of revenue, under the finance ministry, said the revised duty structure will take effect immediately.

In addition to parboiled rice, the government has also slashed the export duty on husked (brown) rice and rice in husk (paddy or rough) to 10%.

The decision is seen as a response to mounting pressure on storage capacity, which has been strained with last year’s stock still occupying granaries just ahead of fresh arrivals.

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The decision marks a reversal of the policy imposed in August 2023, when the government raised the duty to 20% following a poor monsoon due to El Niño, which left key paddy-growing areas rain-deficient.

At the time, the government aimed to ensure domestic availability amid concerns over crop yields. The poor rains had impacted paddy-growing regions, leading to concerns over the domestic supply of rice and pushing the government to restrict exports to secure enough for internal consumption.

Managing stocks

However, with granaries now overflowing and the new crop about to arrive, the export duty cut seeks to facilitate better stock management and allow exporters to clear inventory.

Haryana and Punjab, two of India’s major rice-producing states, have announced their paddy procurement policies, with Haryana starting procurement from Friday.

On 28 August, Mint reported that the government was considering relaxing restrictions on rice exports, given that paddy sowing is set to reach a record high this year.

As per agriculture ministry data, acreage under kharif crops has risen 1.50% year-on-year to 110.46 million hectares as of 20 September, surpassing the four-year average of 109.6 million hectares.

Paddy sowing stood at 41.35 million hectares, a 3% rise from the average area of 40.15 million hectares and a 2.22% increase from 40.45 million hectares a year ago.

Kharif crops, such as paddy, pulses, oilseeds, sugarcane and cotton, had been sown across 108.82 million hectares in the year-ago period.

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As per the consumer affairs ministry, the price of rice saw a 2.2% increase from ₹42.42 per kg to ₹43.35 per kg in a year on 25 September.

In FY24, India exported a total of 15.7 million tonnes of rice, including 2.36 million tonnes of non-basmati white rice, 545,000 tonnes of broken rice and 7.57 million tonnes of parboiled rice, against 21.8 million tonnes in FY23.

The prohibition on non-basmati white rice was announced last July to safeguard domestic food security and protect consumers from price shocks while allowing farmers decent prices amid El Niño disrupting rainfall that resulted in lower crop output.

Additionally, the government has imposed a 20% export duty on parboiled rice.