India Maintains Ban on Broken Rice Exports, 20% Tax on White Rice Shipments to Control Domestic Prices

The Indian government has decided to maintain the ban on broken rice exports and the 20% tax on white rice exports in order to keep domestic prices under control. This decision will result in increased prices for buyers in Asia and Africa who import rice from India.

The ban on broken rice exports and the imposition of export duties on various varieties of rice were introduced in September 2022 due to concerns over production caused by below-average monsoon rainfall in key growing states.

Despite the export duty, India's rice exports rose by 3.5% to a record 22.26 million tonnes in 2022, making it the largest exporter of rice globally. The senior government official informed that rice exports did not slow down despite the export duty, and therefore, there was no reason to reduce or remove the duty.

The Indian government's decision not to lift the ban on broken rice exports is expected to affect buyers, particularly in China, who use broken rice as raw material for making ethanol or cattle feed. China was the largest buyer of India's broken rice, with purchases of 1.1 million tonnes in 2021 However, the official stated that the Indian government preferred the domestic industry to consume broken rice.

The Indian government has also extended the export curbs due to the risk of the El Nino weather phenomenon affecting this year's monsoon rains. Indian farmers plant rice, the most water-thirsty crop, in June and July, when monsoon rains lash the country. The officials cited that India has ample stocks of rice and that the restrictions have not deprived the world of rice.

The decision not to lift the ban on broken rice exports and reduce the export duty on white rice is aimed at maintaining the balance between domestic demand and exports. 

The government's focus on keeping prices in check is also driven by concerns about the impact of rising food prices on inflation and the wider economy. The officials involved in the decision-making process stated that they would like to continue with the same arrangement in the future.