New Delhi: India has scrapped its rice import duty after severe weather hit output, raising the prospect of the world’s second-biggest rice consumer flipping to becoming a net importer.
Government sources said duty-free imports would be allowed up to September next year, the end of the 2009/10 marketing year, as the worst monsoon in 37 years hit sowing and subsequent floods damaged the crop in some regions.
The US Department of Agriculture on Monday forecast a 15 to 17 million tonne decline in India’s rice output for marketing year 2009/10 from a record 2008/09 production of 99.2 million tonnes.
India is likely to consume about 90 million tonnes in 2009/10, leaving a gap of about 8 million tonnes, but part of the deficit would be bridged from surplus stocks after bumper harvests in the last two years.
Government sources said India held 14.5 million tonnes of rice stocks on 1 October, against a target, called “buffer stock norm”, of 5.2 million tonnes, leaving a surplus of 9 million tonnes.
Traders and industry officials say India was still likely to import rice to maintain healthy stocks.
“The rumour in the market is that India probably will have to buy a considerable amount of rice, and 3 million tonnes is what I hear,” Dwight Roberts, president of the US Rice Producers Association, said late Tuesday ahead of the start of a two-day rice conference in Cebu.
D.P. Singh, president of the All India Grain Exporters Association, said the country may buy up to 2 million tonnes of rice next year.
“At the moment nothing will be imported. If imports do take place that would happen after December and January, when the size of the summer sown rice harvest would be known,” he said.
Roberts said possible imports by India may create a situation similar to 2008 when stocks had dwindled and suppliers froze exports in panic.
“It could start a situation like we had in 2008, but it might not be that extreme.”
India banned exports of non-basmati rice last year as the government struggled to control soaring inflation ahead of general elections, part of series of export curbs and big purchases that helped push benchmark Thai rice to a record $1,080 a tonne in April last year. Prices have since more than halved amid thin demand for most of 2009.
Rice prices in India have already surged 25% in the past four months, according to local media reports.