India Rice Ban Causes Global Concern, IMF Encourages To Remove Ban

Indian on July 20 banned exports of non-basmati white rice in order to enhance domestic supply and keep retail prices under check during the upcoming festival season. This type of rice constitutes about 25% of total rice exported from the country. However, the move is likely to impact the global rice market hard as India accounts for approximately 40% of global rice exports and is among the most competitively priced sources of Asian rice, according to reports.

Timing Of Ban: The ban on rice exports from India has come immediately after Russia's declaration of pulling out from the UN and Turkey-brokered Black Sea grain deal, according to report.

Amid soaring prices in the country, the government in India sought to amend the export policy from 'free with export duty of 20%' to 'prohibited' with immediate effect.
Inadequate rainfall and consequent reduced sowing of rice and pulses pushed prices higher in anticipation of production shortfall, stated report.

Meanwhile, there would be no change in export policy of par-boiled non-basmati rice and basmati rice, which forms the bulk of exports, the food ministry stated in a statement, according to a PTI report.

India's Non-Basmati White Rice Export Ban Could Be A Big Blow To Global Markets: "Export policy of non-basmati white rice (semi-milled or wholly milled rice, whether or not polished or glazed)...is amended from free to prohibited," the directorate general of foreign trade (DGFT) said in a notification.

Export policy of Non-Basmati White Rice amended to ensure adequate domestic availability at reasonable prices," the ministry said, adding, the move is aimed to ensure lower prices and adequate availability in the upcoming festival season, stated the PTI report.

The total exports of non-basmati white rice from India was USD 4.2 million in 2022-23 as against USD 2.62 million in the preceding year. Major destinations of India's non-basmati white rice exports include Thailand, Italy, Spain, Sri Lanka and the USA.
In 2022, India accounted for 39% of global rice exports and the figures soared to 41% by June 2023, as per the data released by the US Department of Agriculture.

The reason for the export ban, while not explicitly mentioned, is likely the rise in the price of rice - an average of Rs 40.9 per kg as of 19 July, 11.3 percent higher than what it was a year ago, according to data from the Department of Consumer Affairs.

Rice Export Ban Leads to Stockpiling Of Rice Across The Globe: The decision of India to ban export of non-basmati rice led to consumers stockpiling Indian rice all across the globe, pushing prices in the process, according to CBC.CA report.

In Canada, the U.S. and abroad, reports of panic-buying flashed on social media, with stores that cater to South Asian communities implementing caps on the amount that any customer can buy, and adjusting prices, stated the CBC.CA report.

IMF Worried: Meanwhile, International Monetary Fund (IMF) encouraged India to eliminate export restrictions on non-basmati rice. Addressing a press conference, Pierre-Olivier Gourinchas, Chief Economist of IMF said that these types of restrictions are likely to exacerbate volatility in food prices in the rest of the world, according to report.

"So, they are certainly something that we would encourage the removal of these types of export restrictions because they can be harmful globally," he added.