India’s Non-basmati Rice Exporters Seek Parity in Import Duty

The non-basmati rice exporters, who are facing higher procurement costs because of an increase in minimum support prices (MSP) in the last few years, are now seeking import duty parity for shipments to prospective nations of the Regional Comprehensive Economic Partnership (RCEP).

The Regional Comprehensive Economic Partnership (RECP) proposes free trade agreement between 10 states of the Association of Southeast Asian Nations and its six FTA partners.

Rice exporters had been influencing the commerce ministry to address the discriminatory tariffs even earlier, but they were able to recompense for the higher levy in the past due to the lower MSP rates domestically and the premium for Indian rice exports in global markets. However, the rise in MSP for paddy over the last couple of years has reduced their margins.

Increment in Paddy MSP

Government increased paddy’s MSP to Rs 1,815 per quintal for the year 2019-20, while the A-grade variety’s MSP was hiked to Rs 1,835 i.e increment of rupees 20 and 3.7% over the previous year. The MSP was increased by 13% for the 2018-19 season.

The Exporters are hoping that the commerce ministry will take up this issue at the forthcoming RCEP ministerial meeting to be held in Beijing on August 2-3. Piyush Goyal (Commerce Minister), who was earlier supposed to participate in the discussion, will not attend ministerial meeting in Beijing. Instead of him, India will be represented by commerce secretary Anup Wadhawan.

B V Krishna Rao (president of the association) said that “Rice exports from India incur a substantially higher import duty in countries including Indonesia, Japan, the Philippines, South Korea and Malaysia, while competitors face a lower rate”.

Non-basmati Exports from India, the largest exporter of the raw material have more than halved to 7.1 lakh tonnes in first two months of the current financial year from 15.2 million tonnes in the same period last year.

Indian rice is sold at a premium in the world markets due to its quality, but the members of the ASEAN impose a higher import duty. Indonesia impose 10% import duty for Indian rice, Pakistan has import free access. In Philippines, delivery from India sustains a 50% duty, while it is 35% for rice from other countries. Pakistani exporters have duty-free access to Malaysia’s rice market of Malaysia’s unlike their Indian counterparts. China extends preferential tariffs to Pakistan and attempts by Indian rice exporters to tap the Chinese market have seen limited success. In case of countries like South Korea and Japan the import impose for Indian rice is in the high triple-digit.

The global rice trade has also turned in favour of nations such as Pakistan, China and Thailand, with  trade agreements between Asian countries also hurting the growth rice exports from India.