The Federation of Telangana Chambers of Commerce and Industry (FTCCI) has urged the union government to re-examine the 20% duty on rice exports, which the Narendra Modi administration recently imposed to discourage buyers and to secure domestic supplies. The duty on brown and white rice other than basmati and parboiled varieties covers nearly 60% of the country’s total exports.
The traders say the levy will make Indian rice shipments uncompetitive in the global market and buyers will switch to Thailand and Vietnam. The FTCCI made this representation to Union Minister of Finance Nirmala Sitharaman and Union Minister of Commerce and Industry Piyush Goyal.
FTCCI president Anil Agarwal said that there were several hundred varieties of non-basmati rice in the country with the price of some “much higher than basmati rice. "Some non-basmati variants sell for $ 700-1,400 per tonne. Levying a duty on these variants will prove very expensive. It will have many adverse outcomes for team India in the long term," he wrote.
Agarwal said such a blanket duty would come in the way of Indian rice exporters sinking their teeth in new markets for premium non-basmati segments. “Lack of price competitiveness with exporters from other countries will destroy them. Also, the farmers and exporters from rice surplus States like Telangana will be affected severely due to losing of market (sic) for their competitors from other countries,” he said.
The union government had recently made the decision to impose the 20% duty following the food ministry's recommendation of the levy to ensure sufficient rice stock for the public distribution system and Pradhan Mantri Garib Kalyan Anna Yojana.
The FTCCI said since the shortage was envisaged for varieties of rice meant for PDS and PMGKAY, adding that "we suggest to impose duty according to the export price of rice and a blanket duty on all non-basmati rice variants must be avoided".
India is the biggest rice exporter in the world, with its exports touching 21.5 million tonnes in 2021 or more than the combined shipments of the world's next four biggest rice exporters — Thailand, Vietnam, Pakistan and the US, according to the trade and industry body.
Why this association of traders out of all in the country is disturbed by the duty is curious. While Telangana ranks eighth in non-basmati rice production with a share of 5.54% in total production, its share in rice exports is negligible at 0.21% in 2019-20.