Indian Govt May Impose 70% Import Duty on Rice

After a gap of almost two years, the government of India has decided to bring back imports of rice under the duty regime.

The finance ministry has proposed to impose 70 per cent duty on the import of semi- and wholly-milled rice from November. The import of the commodity has been under the zero-duty regime since October 2009, when international prices were very high.

The import duty had been lifted to facilitate imports, since the production of rice in India had remained muted in 2009-10 due to drought-like conditions and weak monsoon, officials said.

Officials explained rice was an essential commodity and a high duty of 70 per cent was like a trade barrier and not a duty. India currently had so much surplus rice production that exports of non-basmati rice had been allowed. So, imports should also be checked, they said. Currently, since the international prices are low, one could even import to export later, thereby booking profits on exports.

When the zero-duty regime ends this month, the duty will be back to 70 per cent, in line with the original structure of 2002. The agriculture ministry has already forecast that rice production is likely to rise to 102 million tonnes (mt) this crop year, from 95.32 mt last year.

Meanwhile, the area under paddy cultivation increased six per cent to 26.03 million hectares till end of August, from 24.47 million hectares in the corresponding period last year. Kharif paddy is sown during June-July and harvested by September-October.

For the 2011-12 crop year, the government has set a production target of 102 mt of rice, a crop that is mainly grown in the kharif season (summers).

The government announced an increase of up to 16 per cent in the minimum support price (MSP) for kharif crops, fixing MSP for paddy (common) at Rs 1,080 a quintal.

The Food and Agricultural Organization (FAO) of the United Nations has forecast that production in Asia will increase on the back of favourable growing conditions and attractive prices in all major rice producing countries, particularly Bangladesh, China, India and Indonesia. World rice production is expected to touch a record 480.5 mt this year due to higher output in Asia, Egypt, Argentina, Mozambique, the US and Russian Federation, according to FAO. "The outlook for global rice production in 2011 has improved over the past two months and the latest FAO forecast has been raised by 1.6 mt to 480.5 mt (milled rice basis), three per cent up from 2010 and a new record," FAO said.