2 years ago

Export duty on Indian rice

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The latest decision of the Indian government to levy a 20 per cent export duty on rice has come at one of the worst times, as far as Bangladesh is concerned. The neighbouring country, the world's largest rice exporter, might have made the move to protect its interests, but the leading rice importing nations would surely bear the brunt. The Indian finance ministry issued a notification on Thursday, imposing the tax on the export of paddy, husked rice, and semi- and wholly milled rice with immediate effect. 

The decision will stoke concern among both policymakers and traders dealing in rice here. The rice market has been volatile in recent months and prices of fine, medium and coarse varieties soared to record highs. To tame the market, the government first cut the taxes on rice from 62.5 per cent to 25 per cent. As the tax reduction failed to reverse the uptrend in rice prices, the revenue board, in response to the request from the food ministry, lowered further the rate of taxes to 15 per cent to ease import by the private sector. But the private imports of rice remained well below expectations for unexplained reasons. However, if not the prices of coarse varieties, those of medium and fine varieties have lately declined, though marginally.

The government, reportedly, has built up a sizeable buffer stock of rice. To make the reserve far more comfortable, it has also signed a contract to import 230,000 tonnes of rice from Vietnam and has a plan to import 200,000 tonnes more from Myanmar. Sources of the import matter little with state-level import. But the private importers prefer neighbouring India over others as the source of rice import since the quality and taste of rice produced by that country are almost similar to that of Bangladesh. Proximity is also an issue. So, any changes in tariff or import-related restrictions make the worried. The Indian government's latest notification, reportedly, has one saving grace---parboiled rice is exempted from the 20 per cent export duty. In that case, Bangladeshi importers who usually import parboiled rice are unlikely to face any problem.

But there is no certainty that export duty would not be levied on parboiled rice. India has a strong propensity to impose restrictions on different food items, including rice, wheat and onion now and then. Naturally, the price situation in Bangladesh, which imports food items in bulk from the neighbouring country, comes under pressure due to the sudden imposition of restrictive measures. This year, the production of Aus has suffered a setback and the prospect of Aman, a major rice crop, is also not that bright because of the shrinking of acreage under it and the hike in prices of diesel and fertilizers. In such a situation, Bangladesh needs to have assured source/s of food items. This issue is of utmost importance to Bangladesh. And, that is why Bangladesh, during the just-concluded visit of the Bangladesh prime minister to India, requested the authorities there for a 'predictable supply' of essential food items, such as rice, wheat, sugar, onion, ginger and garlic. In response, the Indian side said the request would be 'favourably' considered in light of the prevalent 'supply' situation in India. India is in an advantageous position as far as the production of many essential food items is concerned. Bangladesh enjoys 'special' relations with the giant neighbour, and it could expect some favour as a buyer of the same.

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