Changes in Indian Rice Export Policies

Context:

The Indian government has recently made significant changes to its rice export policies. It lifted the ban on exporting Non-Basmati White Rice and established a minimum export price (MEP) of $490 per tonne. Additionally, the government previously removed a 20% export duty on Non-Basmati White Rice and lowered the export duties on three other rice categories: rice in the husk (paddy or rough), husked (brown) rice, and parboiled rice, reducing the duty from 20% to 10%.

Relevance:

GS III: Agriculture

Dimensions of the Article:

1. Export Ban on Non-Basmati White Rice Lifted
2. Rice Cultivation
3. India’s Status as a Rice Exporter

Export Ban on Non-Basmati White Rice Lifted

• The government has recently lifted the ban on the export of Non-Basmati White Rice, while also imposing a minimum export price (MEP) of $490 per tonne.

Reasons for Lifting the Ban:

• Increase in Paddy Sowing: Favorable monsoon conditions have led to a rise in paddy sowing, with a significant portion of the crop planted during the Kharif season.
• Expansion in Cultivation Area: As of September 20, 2023, the paddy cultivation area reached 413.50 lakh hectares, marking a 2.2% increase over the previous year.
• Rice Production Growth: India’s total rice production for 2023-24 (including Kharif, Rabi, and summer crops) is estimated at 137.82 million tonnes, representing a 1.5% increase from last year.

Price and Inflation Trends:

• Wholesale Price Decline: As of September 27, the wholesale price of rice was Rs 3,324.99 per quintal, down from Rs 3,597.09 a week earlier and Rs 3,502.91 a month ago.
• Retail Inflation Stability: Despite the decrease in wholesale prices, retail inflation measured by the Consumer Price Index has remained in double digits over the past two years, peaking at 13.09% in July 2023 before dropping to 9.52% in August, following the export ban.

Rice Stock Surplus:

• As of September 1, the Food Corporation of India (FCI) had a stock of 323.11 lakh tonnes of rice in its central pool.
• The total stock, including unmilled paddy, amounted to 423 lakh tonnes, far exceeding the buffer stock norms, which require 135.40 lakh tonnes for July and 102.50 lakh tonnes for October.

Who Stands to Benefit?

• Traders: The lifting of the export ban, along with the removal of the 20% duty, is expected to benefit traders by boosting export sentiment.
• Farmers: Farmers, especially those cultivating premium rice varieties like Sona Masoori (primarily in Karnataka, Andhra Pradesh, and Telangana), are likely to benefit as they were previously affected by the ban.
• Consumers: However, domestic consumers may face higher retail prices due to the renewed export activity.

Rice Cultivation:

• Primary Growing Season: Rice is predominantly cultivated during the Kharif season (June to November), aligning with the monsoon rains.
• In specific regions like Tamil Nadu and coastal Andhra Pradesh, rice is also cultivated during the Rabi season (November to April), especially in areas with irrigation.
• Optimal Conditions:
  • Climate: Rice grows best in tropical and subtropical climates with high humidity.
    • Temperature: Ideal growing temperatures range from 21°C to 37°C, with germination thriving around 21°C and the growth period requiring temperatures above 25°C.
    • Rainfall: Requires 150-300 cm of evenly distributed rainfall during the growth period.
• Soil Requirements:
  • Rice thrives in clayey or loamy soils that can retain water.
  • Alluvial soils found in river basins and coastal regions are also ideal due to their depth and ability to retain moisture.
• Water Needs:
  • Being a water-intensive crop, rice is typically grown in flooded fields (paddy fields). Adequate irrigation is critical in regions with insufficient rainfall.

Rice Production in India:

• Cultivated Area: In the fiscal year 2024, approximately 47.6 million hectares of land were dedicated to rice cultivation in India.
• Global Standing: India holds the position of being the second-largest rice producer globally and is the largest exporter of rice.
• Production Estimates: The estimated rice production for 2023-24 is around 1378.25 lakh metric tons (LMT), marking a growth of 20.70 LMT compared to the previous year.
• Geographical Distribution: Rice is extensively grown in the coastal strips of both the eastern and western parts of the country, the Assam plains in the north-east, and the foothills of the Himalayas.

India’s Status as a Rice Exporter

• Global Ranking and Contribution:
  • India is the world’s second-largest rice producer and holds the position as the leading global rice exporter, significantly impacting the world rice trade.
  • Alongside China, India contributes to more than half of the global rice production. While China mainly consumes its rice production, India plays a key role in global exports.
  • As per the USDA, India was responsible for 33% (around 17 million tonnes) of the total global rice exports (53 million tonnes) in 2023.
    • In 2022, prior to the ban on Non-Basmati White Rice exports, India accounted for 40% of global rice exports (56 million tonnes).
• Rice Export Categories:
  • India’s rice exports are classified into two main types: basmati and non-basmati rice.
  • Basmati rice forms approximately one-third of India’s total rice exports, with 52.42 lakh tonnes exported during the 2023-24 period.
  • Non-basmati rice has six subtypes: rice in husk (seed quality and other), husked (brown) rice, parboiled rice, non-basmati white rice, and broken rice.
• Primary Export Destinations (2023-24):
  • The top destinations for India’s rice exports include Saudi Arabia, Iran, Iraq, Benin, UAE, Guinea, Senegal, Togo, and Yemen.
  • Saudi Arabia was the top importer in terms of export value, primarily importing basmati rice.
  • Non-basmati white rice was mainly exported to Kenya, Mozambique, Cameroon, Vietnam, Malaysia, Togo, Madagascar, Cote D’Ivoire, and Benin.
• Competition in Global Rice Market:
  • India’s key competitors in the global rice export market are Thailand and Vietnam. In 2023, the combined exports of these two countries nearly matched that of India.
  • Other notable rice exporters include Pakistan, Cambodia, and the United States.
  • The top rice-importing countries are the Philippines, Indonesia, Vietnam, China, the European Union, Nigeria, Iraq, Saudi Arabia, and Malaysia.

-Source: Indian Express