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Indian rice exporters seek parity in import duty

The Indian Rice Exporters Association is hoping the commerce ministry will take up the issue at the forthcoming RCEP ministerial meeting to be held in Beijing on August 2-3.

, ET Bureau|
Aug 02, 2019, 06.23 PM IST
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Exports of non-basmati rice from India, the largest exporter of the commodity, have more than halved to 7.1 lakh tonnes in first two months of the current financial year.
CHANDIGARH: Exporters of non-basmati rice, who are facing higher procurement costs due to an increase in minimum support prices over the last couple of years, are seeking import duty parity for shipments to prospective countries of the Regional Comprehensive Economic Partnership (RCEP).

The RECP is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations and its six FTA partners.

Rice exporters had been lobbying with the commerce ministry to address the discriminatory tariffs even earlier, but they were able to compensate 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.

The government increased paddy’s MSP to Rs 1,815 per quintal for 2019-20, while the A-grade variety’s MSP was hiked to Rs 1,835 — an increase of 3.7% over the previous year. The MSP was increased by 13% for the 2018-19 season.

The Indian Rice Exporters Association is hoping the commerce ministry will take up the issue at the forthcoming RCEP ministerial meeting to be held in Beijing on August 2-3.

Commerce Minister Piyush Goyal, who was earlier supposed to participate in the deliberations, will not be attending. Instead, India will be represented by commerce secretary Anup Wadhawan, according to a BusinessLine report.

“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,” said B V Krishna Rao, president of the association.

Exports of non-basmati rice from India, the largest exporter of the commodity, 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.

“The non-basmati rice export would come to a halt without financial incentives for exports by the government in the current year and rationalization of import duty by Asean countries is necessary for growth of the trade,” said Himangshu Aggrawal, director, Balajee Rice Industries Ltd, a Chhattisgarh-based leading exporter of non-basmati rice.

Indian rice is typically sold at a premium in most world markets due to its quality, but members of the Asean levy a higher import duty.

Indonesia levies a 10% import duty for Indian rice, while Pakistan has import free access. In the Philippines, consignments from India incur a 50% duty, while it is 35% for rice from other countries. Pakistani exporters have duty-free access to Malaysia’s rice market unlike their Indian counterparts. China, too, extends preferential tariffs to Pakistan, and attempts by Indian rice exporters to tap the Chinese market have seen limited success. In the case of countries such as South Korea and Japan, the import levy for Indian rice is in the high triple-digits.

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