India allows rice exports to Nepal

India has allowed exports of 600,000 tonnes of unmilled rice to Nepal, which traditionally relies on the former to fulfill its food grains requirements. Earlier, India had announced curbs on various rice export varieties due to rise in domestic prices and concerns over crop output.

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New Delhi, Nov 3: India has allowed exports of 600,000 tonnes of unmilled rice to Nepal, which traditionally relies on the former to fulfill its food grains requirements. This follows the government’s decision last month to allow exports of 397,267 tonnes of overseas broken rice shipments backed by letters of credit that were issued before September 9, 2022.

Barring the two premium varieties of rice-parboiled and Basmati rice, India curbed the export of all the other kinds of rice and imposed 20% duty on exports of various grades (including white and brown rice, and raw and broken non-basmati rice). Further, it imposed a ban on exports of 100% broken rice.

Rise in middle class and rapid urbanisation, the demand for fine rice, mainly packaged basmati rice, has increased manifolds in Nepal since 2010. As Nepal does not grow fine rice or basmati rice in large volumes, this demand is met through imports from India, which have ballooned.

The restrictions followed a surge of 8% in retail prices and 9% in wholesale prices from the past year, as of September 2022. The fear of lower output of kharif season could have exerted a lot of pressure on prices of the grain if the tariff measures and restrictions were not announced. According the government, rising prices of broken rice were already hurting the poultry and animal husbandry sectors while contributing ton 60-65% of input costs in poultry feed. The use of broken rice for ethanol production for blending with petrol has also boosted domestic demand, constrained supply and increased prices.

India exports rice to 150 nations, accounting for around 40% of the global rice trade, thereby having a strong impact on global food prices. The country has witnessed a growth of 37.36% YoY in Basmati rice exports in the first six months of FY 2022-23 and 8% growth of non-Basmati in Q2 of current fiscal. The duties might shift of buyers to the next top rice producing nations, Thailand and Vietnam. Main importers of broken rice – China and African nations – would also have to find new avenues to support their requirements.