The government has announced a major change in the export duty structure on rice, exempting non-basmati white rice from any export duty while reducing the levy on parboiled rice to 10 percent. This revision, which took effect on September 27, 2024, marks a significant shift in India’s rice export policy. The duty cut comes just two weeks after the government decided to remove the minimum export price on basmati rice, reflecting an effort to ease trade restrictions and improve the competitiveness of Indian rice in global markets.
According to the notification issued by the revenue department under the finance ministry, the export duty on non-basmati white rice has been fully exempted, which will provide relief to exporters. For parboiled rice, the levy has been reduced from 20 percent to 10 percent, encouraging more trade and likely benefiting farmers and traders alike. The announcement also includes a reduction in the export duty on husked (brown) rice and paddy (rough) rice to 10 percent. The previous duty for all these varieties was set at 20 percent.
These changes have been introduced amidst concerns over inflation and the stability of domestic food supplies. India, being the world’s largest rice exporter, had imposed high export duties earlier in the year to control rising food prices and ensure adequate availability for its domestic market. The move, though effective in stabilizing prices, was met with resistance from exporters and international buyers. The new duty structure now aims to strike a balance between maintaining sufficient stock for the domestic market and allowing for a strong presence in the global rice trade.
Agriculture and trade experts are viewing this decision as a strategic shift, considering India’s dominant position in the global rice market. Non-basmati white rice, which is consumed widely across Asia and Africa, is one of India’s key export commodities. By exempting this variety from export duty, the government seems to be signaling its intent to maintain or even increase its market share, especially in regions that rely heavily on Indian rice. The move is expected to boost rice exports significantly, contributing to the country’s foreign exchange earnings.
In the case of parboiled rice, which is partially boiled before milling to retain more nutrients, the reduced duty will benefit both exporters and farmers who have seen their trade margins shrink due to higher duties. Parboiled rice is particularly popular in regions such as West Africa, and the reduced duty will likely enhance India’s ability to compete with other major exporters such as Thailand and Vietnam. By lowering the duty to 10 percent, the government hopes to strike a balance between supporting exports and safeguarding domestic food security.
The removal of export duty on non-basmati rice and the duty cut on other rice varieties will not only open new opportunities for Indian exporters but also allow them to be more competitive on the global stage. While the move could lead to an increase in exports, the government will still need to monitor the domestic supply situation closely, especially with the ongoing volatility in food prices due to erratic monsoon patterns and climate change.
The reduction in export duties may also have a positive impact on international buyers, many of whom have been wary of rising rice prices since India first imposed export restrictions. The cut in duties could help stabilize prices in global markets, offering some relief to importing nations that depend on Indian rice. For Indian traders, this could mean increased business activity, as more orders are expected to flow in, especially from countries that were previously hesitant to buy due to the high export duties.
India’s rice export sector has always been a critical component of its agricultural economy. With this policy shift, the government seems to be taking a more balanced approach, one that seeks to promote exports while ensuring food security. The global rice market is expected to respond positively to these changes, with Indian rice once again becoming more accessible and competitive on the world stage. The exemptions and duty reductions represent a win for exporters, farmers, and the Indian economy as a whole, reinforcing the country’s role as a leading agricultural exporter.
The reduction in export duties also brings relief to rice producers, particularly farmers who rely on exports for income. The government’s earlier decision to impose higher duties had led to a slowdown in exports, causing stockpiles to rise and prices to fall at the farm gate. Now, with reduced export barriers, farmers are likely to receive better prices for their produce, especially in states such as West Bengal, Uttar Pradesh, and Punjab, where rice cultivation is a major livelihood. This decision aligns with the government’s broader agenda of supporting agricultural growth and improving rural incomes, particularly at a time when inflation has affected input costs.
Moreover, the duty changes could play a significant role in stabilizing India’s overall trade balance. With rice being one of the country’s key export commodities, contributing billions to India’s foreign exchange earnings annually, boosting rice exports can help counterbalance the rising import bill for oil and other essential commodities. The easing of export restrictions on rice will likely attract more global buyers and may create opportunities for long-term trade agreements, which could help stabilize the international market for Indian rice varieties.
For international markets, particularly countries in Asia, Africa, and the Middle East, where Indian rice is in high demand, the duty cut is expected to bring immediate benefits. Many of these nations rely heavily on rice imports from India, and the lower export costs may lead to decreased prices for consumers. It will also help countries that are experiencing food shortages or inflation, as cheaper Indian rice becomes available in greater quantities. India’s move could strengthen its trade relationships with these nations, enhancing its status as a reliable food supplier in times of need.
At the same time, the government remains cautious about potential price fluctuations in the domestic market. Food security remains a priority, and while the duty reduction encourages exports, the government will likely keep a close watch on domestic rice availability. This balance between supporting exporters and ensuring sufficient domestic supply highlights the complexity of managing an essential commodity like rice, which impacts both the livelihood of millions of farmers and the food plates of the entire population.
In the long term, these changes could lead to further reforms in India’s agricultural export policies. If the strategy of reducing duties on rice proves successful in boosting trade without causing inflationary pressures at home, similar measures might be considered for other agricultural products. This approach would support the government’s broader ambition of doubling farmers’ income while strengthening India’s position in global agricultural trade.