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India limits rice exports, which might increase food prices

India, the world’s largest exporter of the grain, tried to increase supplies and stabilise local prices on Thursday after planting was hampered by below-average monsoon rainfall by banning the sale of broken rice and imposing a 20% levy on exports of various grades of the grain.

The new tax will probably deter customers from buying from India and lead them to rivals Thailand and Vietnam instead, which have been battling to boost shipments and raise costs.Basmati and parboiled rice are exempt from the export tariff, which will take effect on September 9.

Additionally, New Delhi outlawed the export of 100% broken rice, which several underdeveloped African nations import for domestic consumption even though it is primarily used for animal feed.

White and brown rice, which make up more than 60% of India’s exports, will be impacted by the tariff, according to B.V. Krishna Rao, president of the All India Rice Exporters Association.

“Due to this tax, rice exports from India will lose their competitiveness on the global market. Consumers will switch to Vietnam and Thailand, “said Rao.India competes with Thailand, Vietnam, Pakistan, and Myanmar for market share of more than 40% of the world’s rice shipments.

Concerns have been raised about India’s rice output due to below-average rainfall in important rice-producing regions including West Bengal, Bihar, and Uttar Pradesh. This year, the nation has already curtailed sugar shipments and outlawed the export of wheat.

The duty will cause a decrease in Indian shipments of at least 25% in the upcoming months, according to Himanshu Agarwal, executive director of Satyam Balajee, the nation’s largest rice exporter.Exporters request some respite from the government for contracts that have already been signed and vessels that are loading at the ports.

“Sellers cannot afford to pay the charge, and neither can buyers pay 20% more than the agreed-upon price. Contracts that have already been signed should not be subject to the tax, “added Agarwal.In 2021, India exported a record 21.5 million tonnes of rice, surpassing the combined exports of the following four countries: Thailand, Vietnam, Pakistan, and the United States.

According to a Mumbai-based dealer with a worldwide trading organisation, India has been the world’s cheapest rice supplier by a wide margin, protecting African nations like Nigeria, Benin, and Cameroon to some extent from a rise in the price of wheat and corn.All food crops had growing costs, he claimed, with the exception of rice, which has since joined the rally.

He warned that the prohibition on broken rice shipments could have a negative impact on China’s purchases for feed.With sales of 1.1 million tonnes in 2021, China was the largest consumer of broken rice, while Senegal and Djibouti, two African nations, purchased broken rice for domestic consumption.