Authorities have decided to reconsider the idea of further reducing duty on rice import as the tax incentives caused the exchequer substantial loss to little benefit for consumers.
Sources said such dilemma cropped up as an impact analysis by a wing of the National Board of Revenue (NBR) found out that market largely ignored the government intervention that came in the wake of price spiralling of the staple.
The fact-finding study, conducted by the NBR's customs wing, found 18 per cent cut in the import duty caused around Tk 1.35 billion loss to the public exchequer since the duty cutbacks with effect from June 21 last.
The customs cut down the duty on the main staple to 10 per cent in a bid to rein in its galloping prices on the local market.
Official sources said India and Thailand revised prices of their exportable rice upward close on the heels of the duty cut by the NBR.
"Initially, rice prices had decreased up to Tk 5.0 per kilogram but took an upturn again," said one official following the impact analysis.
Import duty on rice was the highest at 28 per cent earlier as a protective measure to ensure fair price for local farmers.
Recently, the NBR received a request from the food ministry for waiving the import duty on rice.
An NBR official said they are yet to receive any directive from the government high-ups to cut the import duty on rice in a second phase.
"The NBR is not in favour of further reduction in duty unless any instruction comes from the high-ups," he added.
According to the Trading Corporation of Bangladesh (TCB), as of June 21, prices of coarse varieties of rice increased 46.88 per cent in a year.
Prices of fine and medium varieties of rice like Najir, Miniket and Paijam had also increased 20.65 per cent.
Neither the prices of coarse nor of fine varieties of rice did show any impact of duty reduction although the government expects a Tk 6.0 decrease per kg after 18 per cent rate cut.
According to the TCB data, coarse rice sold Thursday at Tk 43-45 a kg. It was Tk 46-48 per kg before the lowering of duty to encourage import.
Also, prices of fine and medium verities of rice sold almost at similar prices as before--ranging from Tk 48 to Tk 60 per kg.
The country saw a twofold import of rice in recent times compared to that of the fiscal year 2015-16.
Both public and private sectors imported 2.88 lakh tonnes of rice between July 1 and August 8, 2017.
Despite import of a large quantity of rice prices of the item remained high as earlier, the official said.
Customs officials said many of the importers held up release of their imported rice anticipating further cuts in duty
Some importers have piled up imported rice in the customs port, waiting for government decision on further duty cuts, they added.