Home / Economy / Rice shipments stuck after govt imposes export duty

NEW DELHI : Exporters have sought a relaxed deadline for the clearance of around one million tonnes of rice stuck in transit after the government imposed a 20% export duty on some varieties of rice and banned broken rice exports.

The Directorate General of Foreign Trade on Friday said rice consignments will be allowed to be shipped till 15 September, subject to certain conditions. However, exporters said it is too short a transition window.

“Contracts are given months back so a sudden ban has created a lot of problems because the notification gave a six-day transition period which is too short. About 700,000-1 million tonnes of rice are stuck in transit. Broken rice is about $380 per tonne and other varieties are about $450 a tonne. The situation is grave at the moment. The order also said that those consignments that have been allotted rotation number or those that were handed over to the customs will be allowed to move out but that is not happening They are stopping consignments that should not be stopped," Vinod Kaul, senior executive director, All India Rice Exporters Association (AIREA), said.

Tonnes of rice are stuck in transit as exporters are refusing to pay the 20% duty that was imposed on the exports of paddy, husked (brown) rice, and semi-milled rice. Exporters said the margin in rice exports is about 2-3 % and a 20% duty means incurring steep losses.

Foodgrain stocks with the Food Corporation of India (FCI) are at their lowest in five years. As of 16 August, combined rice and wheat stocks in the central pool stood at 52.3 million tonnes. Earlier this year, the Centre had started replacing rice with wheat for its free food programme since wheat production suffered from extreme heat waves in March.

Official estimates suggest that rice sowing is down by 3.8 million hectares and the loss of production may be 10-12 million tonnes this year due to a variety of factors, including deficient rainfall.

“Many traders might not have factored in the duty and, therefore, they may not be in a position to export. So, from the trade point of view, there is a problem but we can neither ignore the fact that there is an abnormal surge in rice exports. If ships have been given a rotation number, loading should not be a problem because a rotation number is given when a ship enters territorial waters. Traders will certainly face problems because some rice may have moved from the factory, or highways or the port area," said Ajay Sahai, chief executive officer and director-general of the Federation of Indian Export Organisations (FIEO).

The Directorate General of Foreign Trade has allowed rice exports till 15 September, if loading began prior to the order, and in cases where the shipping bill has been filed and vessels have arrived at their destination.

The notification added that broken rice consignments “handed over to the customs" before the notification and registered with the system will also be exempt from the ban.

“Some exporters at ports like Kandla in Gujarat have moved shipments after paying the export duty, while others are still negotiating with the buyers...the duty was imposed on the proposal of the food ministry.. if they urge us to relax it to ease the congestion, we may consider it," said a revenue department official.

He added that none of the government departments have reached out to the ministry of finance yet on the issue.

Reuters reported at least 350,000 tonnes of broken rice, lying at various ports, do not meet these criteria, while moving cargoes back to the hinterland is not possible.

ravi.dutt@livemint.com

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