India maintains rice export restrictions to control domestic prices and ensure adequate stocks

By Soham Shetty

India has decided not to lift its ban on broken rice exports or reduce the 20 percent tax on overseas shipments of white rice as it seeks to keep a lid on domestic prices, according to two government sources. The move is expected to result in higher prices for rice buyers, particularly in Asia and Africa.

The ban on exports of broken rice and the imposition of the 20 percent duty on various other grades were introduced in September 2022 amid concerns over production due to below-average monsoon rainfall in key growing states.

Despite the restrictions, India’s rice exports rose 3.5 percent to a record 22.26 million tonnes in 2022, more than the combined shipments of the next four largest exporters: Thailand, Vietnam, Pakistan, and the United States.

“We can’t resume broken rice exports just because somebody in China or any other country wants it as a raw material to make ethanol or cattle feed. We’ll rather prefer our domestic industry consuming it,” said a senior government official who declined to be named in line with official rules.

China was the biggest buyer of India’s broken rice, with purchases of 1.1 million tonnes in 2021. However, India will not be resuming exports to China or any other country at this time.

“We’d like to continue with the same arrangement,” said another government source directly involved in decision-making. “Our restrictions have not deprived the world of rice, and at the same time, we’ve been able to maintain adequate stocks.”

India’s farmers plant rice, the most water-thirsty crop, in June and July when monsoon rains lash the country. Due to apprehensions that the El Nino weather phenomenon might hit this year’s monsoon rains, India will extend its rice export curbs.

“We don’t want to take a chance. We’ve limited wheat stocks but ample rice stocks, which we can use if the weather throws any big surprise,” the official said.

The decision to maintain the export restrictions is expected to impact buyers, particularly in Asia and Africa, who will now have to pay more for the staple.

India’s export restrictions have been in place for several months and are likely to remain so until the government is confident that monsoon rains will not have a significant impact on domestic production.