20% duty on non-basmati rice variants will hit exports: FTCCI

In a representation to the Finance Minister Niramala Sitharaman and Commerce Minister Piyush Goyal, FTCCI President Anil Agarwal said the blanket imposition of 20 percent duty irrespective of the variety, quality, standard, demand and price of rice would cripple non-basmati exports from India.

Hyderabad: The 20 per cent duty imposed by the Government of India on exports of non-basmati rice will result in rice shipments becoming noncompetitive in the world market and importers shifting to Thailand and Vietnam, said industry body FTCCI.

In a representation to the Finance Minister Niramala Sitharaman and Commerce Minister Piyush Goyal, FTCCI President Anil Agarwal said the blanket imposition of 20 percent duty irrespective of the variety, quality, standard, demand and price of rice would cripple non-basmati exports from India.

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On September 14, the Department of Revenue in the Ministry of Finance notified the slapping of a 20% duty on exports of rice. It excluded parboiled and basmati rice. This would have covered all raw non-basmati rice shipments, whether of full or broken grains. However, another notification from the Directorate General of Foreign Trade ( Ministry of Commerce and Industry) imposed a blanket ban on broken rice exports. It implies that only export of full grain consignments would be permitted on payment of 20% duty.

FTCCI said India is the world’s biggest rice exporter and its rice exports have touched 21.5 million tonnes in 2021, more than the combined shipments of the world’s next four biggest rice exporters – Thailand, Vietnam, Pakistan and the United States. India accounts for more than 40 per cent of global rice shipments and competes with Thailand, Vietnam, Pakistan and Myanmar in the world market.

The Department of Food and Public Distribution (DFPD) had said the export price of non-basmati rice was 28-29 per kg, which was supposedly higher than the domestic price. FTCCI said this information was misleading and the duty imposed was based on incorrect data. The DFPD had assumed that all non-basmati rice variants put under single HS Code (HS-10063090) sell for 28-29 per kg.

But in reality, there are several varieties of non-basmati rice including Sona Masoori, Wada Kolam, Jeera Samba, Ponni, black and red rice, and others. Some of these sell for $700-1,400 per metric tonne (MT). Levying a duty on these variants would have many adverse outcomes for India in the long term, according to Agarwal.

Indian rice exporters will not be able to capture new markets in premium non-basmati segments due to the 20% duty. Lack of price competitiveness will destroy them. Also, farmers and exporters from the rice surplus states like Telangana will be affected severely as they would lose the market to competitors from other countries.

As shortage is envisaged for varieties of rice that are meant for public distribution system and Pradhan Mantri Garib Kalyan Anna Yojana, Agarwal suggested imposing duty according to the export price of rice and avoiding a blanket levy. Long Grain and Swarna are varieties that sell for $300-400 per MT were fit candidates for the levy. He suggested that export prices between $301-400 per MT can have a duty of 20%, between $401-500 per MT 10%, between $501-600 per MT 5% and export price above $601 per MT zero per cent duty.