IMF Urges India to Lift Export Ban on Non-Basmati Rice

By IndraStra Global News Team

Cover Image Attribute: The file photo of  Rice Fields, Gangavati, Karnataka, India

India's decision to limit the export of specific rice varieties could worsen food price inflation. According to Pierre-Olivier Gourinchas, the International Monetary Fund's chief economist, it ought to be reconsidered. During a news conference, Gourinchas noted that India's restriction might have a similar impact as the suspension of the Ukraine Black Sea grain export deal, leading to price hikes in other nations. He further warned that global grain prices might experience a 10-15% increase this year.
"In the current environment, these types of restrictions are likely to exacerbate volatility on food prices in the rest of the world, and they can also lead to retaliatory measures," Gourinchas said. "We would encourage the removal of these types of export restrictions because they can be they can be harmful globally."
Six days ago, the Indian government changed the Export Policy for Non-Basmati White Rice in response to the escalating domestic market prices. The policy was amended from 'Free with export duty of 20%' to 'Prohibited' with immediate effect, aiming to ensure sufficient availability of the rice variety in the Indian market and curb the price surge. The domestic prices of rice have been steadily rising, with retail prices increasing 11.5% over the past year and 3% over the past month.  
On September 8, 2022, an export duty of 20% was implemented on non-basmati white rice to both reduce its price in the domestic market and ensure its availability. Despite this measure, the export of this rice variety increased from 33.66 LMT (Sept-March 2021-22) to 42.12 LMT (Sept-March 2022-23). In the current fiscal year 2023-24 (April-June), around 15.54 LMT of non-basmati white rice was exported, compared to only 11.55 LMT during FY 2022-23 (April-June), reflecting a 35% increase. This significant surge in exports can be attributed to higher international prices influenced by geopolitical factors, El Nino sentiments, extreme climatic conditions in other rice-producing countries, and other related factors.
Approximately a quarter of the total rice exports from the country are comprised of Non-Basmati White Rice. The prohibition on its export is expected to reduce consumer prices within the country. Nonetheless, the Export policy for Non-Basmati Rice (Par Boiled Rice) and Basmati Rice, which constitute the majority of Rice exports, remains unchanged.
NOTE: As of July 1, India possessed substantial reserves of non-basmati rice, amounting to approximately 41 million tonnes, enough to cater to both domestic public distribution and government-level trade requirements. Additionally, Vietnam is set to begin harvesting its primary crop, which may help ease the pressure on global rice supplies even further.

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