India, the world’s leading rice shipper, may consider extending an export tax on the parboiled variety as part of efforts to ease food inflation ahead of national elections. This move could potentially maintain tight global supply and drive prices to new peaks, as reported by Bloomberg.
According to sources familiar with the situation, the administration led by Prime Minister Narendra Modi, who is vying for a third term in the upcoming elections in the first half of this year, is contemplating maintaining the export levy at 20%. These individuals, requesting anonymity due to the confidential nature of the discussions, mentioned that there is presently no immediate plan to prohibit the export of parboiled rice. The current tax is set to expire on March 31.
Such a decision could contribute to the surge in benchmark Asian rice prices, which have remained close to a 15-year peak since India initiated limitations on the sale of crucial varieties in 2023. This development would pose challenges for certain nations in West Africa and the Middle East, as they heavily depend on India to fulfill most of their essential food staple needs.
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A spokesperson representing both the food and commerce ministries declined to provide immediate comments.
Extending the levy would form a component of the government’s proactive strategies to manage food inflation, which surged to nearly 10% in December compared to the previous year. India has already restricted exports of wheat, sugar, and the majority of rice varieties, while also implementing measures to combat hoarding. Additionally, it has prolonged the period of low import duties on edible oils for another year.
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However, rice retail prices in Delhi remain approximately 11% higher than they were a year ago. Food Minister Piyush Goyal launched a program on Tuesday to provide subsidized rice to retail customers across the country. The government is already selling wheat flour and chickpeas at rates cheaper than those in the market.
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Before the restrictions, parboiled rice constituted roughly 30% of India’s total exports. This variety undergoes a process involving partial boiling of paddy prior to milling, enhancing its nutritional content and altering the texture of the cooked rice. In the 2022-23 period, India held a share of approximately 40% in the global rice trade.