The Indian government announced on Friday that it has reduced the export duty on parboiled rice from 20% to 10%. This decision follows a year after the Center implemented a 20% duty on this staple food due to concerns about potential production shortages in India. The move comes in light of below-average rainfall recorded in 2023, with the order extended until March 31, 2024.

In July, the government established the Rice Federation Consulting Committee, led by the Ministry of Commerce, to address rice export issues. Earlier in September, the Center also eliminated the floor price for basmati rice, which is anticipated to lead to a surge in orders from Europe, the Americas, and the Middle East, according to sources. 

Global Market Position 

This decision could enable India, the world's largest rice exporter, to increase its share of the staple food in the global market, according to leading exporters. Meanwhile, India's retail inflation rose to 3.65% year-on-year in August, up from a five-year low of 3.54%, as reported by the Ministry of Statistics & Programme Implementation earlier this month. In its August Monetary Policy Meeting, the Reserve Bank of India expressed concerns regarding the trajectory of food inflation.

A Sustainable Approach

RBI Governor Shaktikanta Das stated that headline inflation could rise if food inflation is not closely monitored. He noted, “Inflation is gradually trending down, but the pace is slow and uneven. Achieving a durable alignment of inflation to the target of 4.0% is still some distance away. Persistent food inflation is contributing to the stickiness of headline inflation.”

Conclusion

In conclusion, the Indian government's cut of the export tax on parboiled rice from 20% to 10% is a strategic effort to boost its global rice market position amid domestic production and inflation concerns. Removal of the basmati rice floor price, aims to stimulate exports and tackle climate-related challenges. Ongoing monitoring of food inflation will be essential for sustainable growth in the agricultural sector.

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REFERENCE: The Economic Times