MUMBAI: Rice loading has stopped at Indian ports and nearly one million tonnes of grain are trapped there as buyers refuse to pay the government’s new 20 per cent export levy on top of the agreed contract price, five exporters told Reuters on Friday.
India banned exports of broken rice and imposed a 20pc duty on exports of various other types on Thursday as the world’s biggest exporter of the grain tries to boost local supplies and calm prices after below-average monsoon rainfall curtailed planting.
“The duty became effective from midnight, but buyers are not ready to pay the duty,” said B.V. Krishna Rao, president of the All India Rice Exporters Association (AIREA). “We have stopped loading vessels.” India ships around two million tonnes of rice every month, with large amounts loaded from eastern ports such as Kakinada and Visakhapatnam in Andhra Pradesh state.
In similar circumstances, New Delhi has in the past provided exemptions for contracts backed by letters of credit (LCs), or payment guarantees, issued until the day the government made a policy change, said Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest rice exporter. But that has not happened this time.
“Margins are wafer-thin in rice business and exporters can’t afford to pay 20pc duty. The government should allow exports against already issued LCs,” Agarwal said.
Published in Dawn, September 10th, 2022