India has taken action on food, levies 20% tariff on all types of rice exports

On Thursday (September 8), local time, India announced that it will impose a 20% tax on some rice exports to ensure its domestic food supply.

Unmilled and hulled brown rice will be subject to a 20 percent export tax from September 9, India's finance ministry said on Thursday. Apart from parboiled and basmati rice, semi- or whole-milled rice will also be subject to a 20 percent duty.

This year, India's major rice-producing states, including West Bengal, Bihar and Uttar Pradesh, have experienced below-average rainfall, raising concerns about a reduction in India's rice production. Data released by India's agriculture ministry in the middle of last month showed that the country's total rice acreage fell by 12 percent.

As the world's largest rice exporter, India exports more than 40% of the rice in the international market. The country's rice export volume reached a record 21.5 million tons last year, surpassing the four rice exporters Thailand, Vietnam, Pakistan and the United States. total export volume.

Among them, Vietnam and Thailand are the world's second and third largest rice exporters respectively, and these two countries have been trying to increase shipments and are the main competitors of Indian rice.

BV Krishna Rao, president of the Rice Export Association of India, said that while parboiled rice, commonly known as parboiled rice, and basmati rice are excluded from export duties, white and brown rice, which account for 60 percent of India's exports, will be subject to duties. above. "With this tariff, Indian rice will become uncompetitive in the world market and buyers will turn to Thailand and Vietnam," he warned.

Himanshu Agarwal, executive director of Satyam Balajee, India's largest rice exporter, expects India's rice exports to drop by at least 25 percent in the coming months due to the tariffs.

Food inflation may intensify

In May, India banned wheat exports and restricted sugar exports due to extreme heat. However, India is not a major wheat exporter by nature, and the country's ban on wheat exports has not had much impact.

However, the situation with rice is completely different. India exports rice, a staple food for more than 3 billion people, to more than 150 countries around the world, and a reduction in its exports will exacerbate global food inflation.

India banned rice exports in 2007, a move that pushed global rice prices to new highs.

After the outbreak of the Russia-Ukraine conflict, global food prices rose to a record high in March, and although they have since fallen back, they are still significantly higher than the same period last year.

Food prices remain high despite having fallen for five consecutive months, with grains, which have been the main driver of food price increases this year, still very high, said Erin Collier, an economist at the Food and Agriculture Organization of the United Nations (FAO).