Don’t go for blanket duty levy on non-basmati rice exports: FTCCI

The Federation of Telangana Chambers of Commerce and Industry (FTCCI) has appealed to Union Finance Minister Nirmala Sitharaman and Commerce Minister and Minister of Consumer Affairs, Food, and Public Distribution Piyush Goyal to reconsider and withdraw the decision to levy duty on export of non-basmati rice.

“With this duty, Indian rice shipments will become uncompetitive in the world market. Buyers will shift to Thailand and Vietnam” the association said in a memorandum submitted to the Union Ministers.

A big family of rice species

It argued that non-basmati is not one variant of rice but a very big family of rice species.

“India’s agricultural biodiversity and heritage deserve recognition and respect. The blanket duty on non-basmati rice must be reversed. Otherwise, there will be a devastating impact on Indian exports,” Anil Agarwal, President of FTCCI, said in the memorandum.

“There are several hundred varieties of non-basmati rice in India. Some of these sell for a much higher price than basmati rice. Some non-basmati variants sell for $700 up to $1,400 a tonne,” it pointed out.

Levying a duty on these variants will prove very expensive and will have many adverse outcomes for India in the long term, it argued.

Loss of market

“If the blanket duty is imposed, Indian rice exporters will not be able to capture new markets in premium non-basmati segments. Lack of price competitiveness with exporters from other countries will destroy them,” it said.

Also, farmers and exporters from rice surplus states will be affected severely due to loss of market for their competitors from other countries.

“The decision comes at a time when the government is making serious efforts to promote Indian exports. We rely on the administration to make well-informed decisions. Exporters need their support and understanding,” it said.

The association said the country was the world’s biggest rice exporter, touching 21.5 million tonnes in 2021. This was more than the combined shipments of the world’s next four biggest rice exporters – Thailand, Vietnam, Pakistan, and the United States.

“India accounts for more than 40 per cent of global rice shipments and competes with Thailand, Vietnam, Pakistan, and Myanmar in the world market,” it pointed out.

Incorrect data by DFPD

“The reasoning given by the Department of Food and Public Distribution (DFPD) is that the export price of non-basmati rice is ₹28-29 per kg, which is higher than the domestic price. We submit that this information is misleading and the duty is based on incorrect data,” it contended.

The DFPD has assumed that all non-basmati rice variants put under a single HS Code (HS-10063090) sell for ₹28-29 per kg. But in reality, there are several non-basmati premium varieties that have a huge international market selling at 3-4 times higher than the variety quoted,” it observed.

A blanket imposition of 20 per cent duty, not taking into account the variety, quality, standard, demand, and price, would cripple non-basmati exports from the country.

“We, at FTCCI, appeal to you to look into the various aspects presented here and support the Indian rice exporters and protect the international market of India in rice for the benefit of farmers, exporters, government, and the country as a whole,” the association said.

Solution

The association comes out with a suggestion to tackle the challenge of likely non-availability of the commodity in the country.

“Since the shortage is envisaged for varieties of rice that are meant for PDS and PMGKAY, we suggest imposing duty according to the export price of rice, and a blanket duty on all non-basmati rice variants must be avoided,” it suggested.

A blanket duty will make it difficult for exporters to promote Sona Masoori, Wada kolam, Jeera Sambha fragrance rice, Ponni Rice, black rice, and red rice, which have a huge demand abroad.

Suggested duty slabs

Export price range Percentage of duty
$301-400 per MT 20%
$401-500 per MT 10%
$501-600 per MT 5%
Above $601 per MT 0%

Published on

September 23, 2022

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