Lifting of Non-Basmati White Rice Export Ban: Impact on India’s Rice Market

What’s in today’s article?

• Why in News?
• Rice Cultivation
• Rice Production in India
• India’s status as a rice exporter
• Export ban on Non-Basmati White Rice lifted

Why in News?

Recently, the Indian government lifted the ban on the export of Non-Basmati White Rice. However, it set a minimum export price (MEP) of $490 per tonne. 

Earlier, the government had removed the 20% export duty on Non-Basmati White Rice and reduced the export duty on three other rice categories: 'rice in the husk (paddy or rough)', 'husked (brown) rice', and 'parboiled rice' from 20% to 10%.

Rice Cultivation

• Crop Season
  • Rice is primarily grown during the Kharif season (June to November), which coincides with the monsoon. 
  • In some areas, it is also grown in the Rabi season (November to April), particularly in irrigated regions like Tamil Nadu and coastal Andhra Pradesh.
• Climatic Conditions
  • Rice thrives in tropical and subtropical regions with high humidity. It requires:
    • Temperature: An average temperature of 21°C to 37°C. The ideal temperature for germination is around 21°C, while the growing period requires temperatures above 25°C.
    • Rainfall: Rice needs plenty of water. It requires 150-300 cm of rainfall during the growing period, ideally distributed evenly throughout the season.
• Soil Conditions
  • Rice grows best in clayey or loamy soils that retain water. 
  • Alluvial soils in river basins and coastal areas are also ideal for rice cultivation. The soil should be deep, fertile, and capable of holding moisture.
• Water Requirements
  • Rice is a water-intensive crop, usually grown in flooded fields (paddy fields). Adequate irrigation is necessary in areas with insufficient rainfall.

Rice Production in India

• Area of cultivation for rice
  • In fiscal year 2024, India had an estimated 47.6 million hectares of land area for rice cultivation. 
  • India is the second-largest producer of rice globally, and the largest exporter. 
• Production
  • India's rice production in 2023-24 is estimated to be 1378.25 lakh metric tons (LMT), a 20.70 LMT increase from the previous year.
• State's share in rice production

• Rice is produced in the coastal strips on the eastern and western pockets of the country, the plains of Assam in the north-east, and the foothills of the Himalayas.

India’s status as a rice exporter

• Statistics
  • India is the second-largest rice producer and the largest exporter globally, contributing significantly to world rice trade. 
  • Along with China, India accounts for over half of the world's rice production. While China is the largest consumer, leaving little for export, India plays a dominant role in the export market. 
  • According to the USDA, India accounted for 33% (17 million tonnes) of the world’s total rice exports (53 million tonnes) in 2023. 
    • In 2022, before the Non-Basmati White Rice export ban, India contributed about 40% of the global rice exports (56 million tonnes).
• India’s export breakup
  • India’s rice exports are divided into two main categories: basmati and non-basmati rice. 
  • Basmati rice accounts for nearly one-third of India’s total rice exports, with 52.42 lakh tonnes exported in 2023-24. 
  • Non-basmati rice has six subcategories: rice in husk (seed quality and other), husked (brown) rice, parboiled rice, non-basmati white rice, and broken rice.
• Export destination
  • The primary destinations for Indian rice exports in 2023-24 are Saudi Arabia, Iran, Iraq, Benin, United Arab Emirates, Guinea, Senegal, Togo, and Yemen.
  • Saudi Arabia was the leading importer of Indian rice in terms of export value, mainly purchasing basmati rice varieties.
  • Non-basmati white rice went to Kenya, Mozambique, Cameroon, Vietnam, Malaysia, Togo, Madagascar, Cote D’ Ivoire, and Benin in the biggest quantities.
• India’s competitor
  • Two east Asian countries—Thailand and Vietnam—are the two main competitors of India in the global rice market. 
    • In 2023, the combined rice export of these two countries was almost equal to Indian exports. 
  • Besides, Pakistan, Cambodia and the United States are also in the list of rice exporters.
  • Philippines, Indonesia, Vietnam, China, European Union, Nigeria, Iraq, Saudi Arabia and Malaysia are the top rice importers.

Export ban on Non-Basmati White Rice lifted

• About the news
  • The Centre has lifted the ban on export of Non-Basmati White Rice. It has, however, imposed a minimum export price (MEP) of $490 per tonne.
• Reasons behind lifting the ban
  • Higher Sowing of Paddy
    • India has seen an increase in paddy sowing due to a good monsoon, with most of the crop being planted during the kharif season. 
    • By September 20, 2023, the paddy cultivation area reached 413.50 lakh hectares, a 2.2% increase over last year.
  • Record Rice Production
    • India’s total rice production for 2023-24 (kharif, rabi, and summer) is estimated at 137.82 million tonnes, a 1.5% increase compared to last year.
  • Declining Wholesale Prices, Stable Retail Inflation
    • On September 27, the wholesale price of rice was Rs 3,324.99 per quintal, down from Rs 3,597.09 a week ago and Rs 3,502.91 a month ago. 
    • However, retail inflation based on the Consumer Price Index has remained in double digits for the past two years, peaking at 13.09% in July 2023. 
    • Inflation dropped to 9.52% in August after the government’s export ban.
  • Surplus Rice Stocks
    • As of September 1, the Food Corporation of India (FCI) held 323.11 lakh tonnes of rice in its Central pool. 
    • Including unmilled paddy, the total stock amounted to 423 lakh tonnes, well above the required buffer stock norms of 135.40 lakh tonnes for July and 102.50 lakh tonnes for October.
• Who will get benefitted?
  • The lifting of the ban will benefit traders, who previously paid a 20% duty, and is expected to improve export sentiment. 
  • Farmers growing premium varieties like Sona Masoori (mainly in Karnataka, Andhra Pradesh, and Telangana) are likely to benefit, as they were impacted by the ban. 
  • However, for domestic consumers, already high retail prices may increase further.

Q.1. Why did India lift the export ban on Non-Basmati White Rice?

The ban was lifted due to increased paddy sowing, record rice production estimated at 137.82 million tonnes, declining wholesale prices, and surplus stocks in the Food Corporation of India.

Q.2. Who benefits from the lifting of the rice export ban?

Traders and farmers growing premium varieties like Sona Masoori will benefit, while domestic consumers may face higher retail prices as a result of the lifting.

Source: Export ban on Non-Basmati White Rice lifted: why, what is the likely impact | DGCI | The Hindu Businessline