India Not Planning To Impose Export Restrictions On Parboiled Rice, Says Food Secretary

Food Secretary Sanjeev Chopra shunned media reports related to the Indian government's planning to impose additional restrictions on the shipment of grains owing to stubbornly high food prices, a move that was expected to tighten global supply. Chopra said that there is no proposal as of now to restrict parboiled rice exports.

Earlier, on Wednesday, people familiar with the matter told Bloomberg that the government is considering imposing a tax on shipments of parboiled rice. However, the sources said that no decision has been made yet and there's no certainty deliberations will lead to the implementation of duties.

Chopra responded to the questions about whether India was considering imposing an export tax or introducing a floor price for parboiled rice exports. He said, "There is no proposal as of now to restrict parboiled rice exports," as reported by Reuters.

Parboiled rice accounts for nearly a third of the country's total rice exports.

In July, the government in a surprise move levied a ban on the export of widely consumed non-basmati white rice, following a ban on broken rice exports last year. Since the ban, prices have gone by 15% to 25% respectively.

This month, rice in Asia jumped to its highest level in almost 15 years after the South Asian nation declared a ban on some exports due to concerns over the outlook for Thailand's production.

In such times, the Indian government stepped up efforts to cool domestic food prices ahead of the 2024 general election, recently targeting the rising cost of onions, the report said.

India's share as a rice exporter currently stands at 40.59%, making it the second largest exporter globally. In 2022, the country exported 22 million tonnes worth $9.66 billion of rice to 140 countries. Of the total, 8 million tonnes were parboiled rice, while 6 million tonnes were non-basmati white rice, 4.5 million tonnes were basmati rice, and 3.5 million tonnes were broken rice.

Recently, RBI in its August 2023 bulletin said, "The uptick in inflation in its June reading mutated in July, with the unprecedented shock to tomato prices spilling over to prices of other vegetables. While core inflation witnessed a moderation, headline inflation is expected to average well above 6 per cent in the second quarter."

However, RBI also believes that stagflation risk remains low for India with a probability of only 3 per cent with the easing of financial conditions, stability of the INR/USD exchange rate and steady domestic fuel prices.

In July 2023, CPI or retail inflation accelerated to 7.44%, the highest level since April 2022. This huge upside is due to a sharp spike in food prices. Food inflation zoomed to 11.51%. Inflation has also breached RBI's upper tolerance limit for the first time since March 2023.

In the August monetary policy, RBI kept the repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50% for the third time in a row. RBI raised its CPI inflation target to 5.4% in FY24.

The All-India Consumer Price Index Number for Agricultural Labourers and Rural Labourers increased by 19 points each to stand at 1215 and 1226 points respectively. The major contribution towards the rise in the general index came from the food group to the extent of 18.23 and 18.28 points respectively mainly due to increase in prices of rice, wheat atta, pulses, milk, fish-fresh/dry, gur, chillies-green/dry, turmeric, garlic, ginger, onion, mixed spices, brinjal, tomato, gourd, etc.