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India, in 2022-2023, exported 22.3 million tons of rice valued at more than $11.1 billion. Narendra Modi The government’s decision on Thursday to ban all shipments of non-basmati white rice It will effectively remove about 9.9 metric tons from the global market. From now on, only two categories of rice – Basmati and Non-Parboiled Basmati – will be allowed out, totaling 12.4 metric tons and valued at $7.8 billion in the last fiscal year. This move has local and global implications. Total world rice exports reached 55.6 metric tons in 2023-2023, with India’s share exceeding 40 percent, according to the US Department of Agriculture. India’s role in the global rice trade is, in many ways, similar to Indonesia and Malaysia’s role in palm oil. While rice has more suppliers – Thailand, Vietnam, Pakistan, the US and Myanmar – they cannot fill the void left by India. Therefore, the rise in global prices is inevitable.
The final decision follows a series of procedures, Starting with a ban on wheat exports last May Then on broken rice in September, which was accompanied by a 20 percent tariff on shipments other than unboiled basmati. Sugar exports also stopped after May this year. All of these measures – which were undoubtedly reactionary – were a response to domestic supply concerns. The Modi government is clearly concerned about the current rice crop, given the abnormal monsoon rainfall in key developing states. While some – including Telangana, Andhra Pradesh, Odisha and Chhattisgarh – received good rains in the past week, the effects of delayed planting on crops remain to be seen. No less uncertain is El Niño, which could affect the performance of the monsoon in the second half, and thus the fortunes of autumn rice as well as next spring wheat.
While restrictions on exports may be justified under exceptional circumstances, the government must keep two things in mind. The first is credibility. Why ban the export of wheat and so much rice if India’s grain production hits an all-time high in 2022-23, according to the Ministry of Agriculture? It raises questions about the reliability of official output estimates. Remember how last year’s wheat export ban came shortly after claims about “feeding the world” from India. The second is its image as a reliable global supplier, including countries in Africa and West, South and Southeast Asia. Building markets takes time and effort, both of which can be undone with just the stroke of a pen. If exports are to be discouraged at all in order to contain domestic inflation, the correct approach is to impose a tariff or a floor price below which no shipments are allowed. A blanket export ban does more harm than good.
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