Ban on non-basmati rice export likely to go as inflation cools

Close on the heels of lifting the temporary ban on maize exports, an empowered group of ministers (eGoM) is scheduled to meet on Tuesday to review the ban on exports of non-basmati rice.

Sources said the government could also consider re-imposing import duties on edible oil, easing export curbs on cotton and lifting export duty on basmati (aromatic) rice.

?The eGoM will meet to deliberate on a whole gamut of steps that were taken to fight inflation as the market has changed dramatically since then,? a senior government official said.

Sources said comfortable foodgrain stocks with the government and the fact that realisation for growers could be badly hit if the government continues with the export curbs has also encouraged a re-think. ?In case of rice if not a total waiver allowing exports of some high-priced varieties could be considered,? the official, added.

India banned exports of non-basmati rice in April to curb rising inflation. However, since then the price of benchmark Thai rice has dropped to below $700 per metric tonne from a high of over $1,000 per tonne in the international markets, while it has remained fairly stable in the local markets.

On the other hand, state-run agencies have managed to procure more than 27 million tonnes of rice during the last crop-marketing year that ended in October. Government?s foodgrains stocks, both rice and wheat, as on Oct 17 is around 30 million tonnes. In the same month, the government also scrapped the import duty on crude edible oils and reduced it to 7.5% from over 20% on refined oils to check rising prices. Like in rice, edible oil prices have also almost halved in the local and international markets due to easing crude oil prices.

International markets mostly govern Indian edible oil prices as the country imports more than half of its annual demand.

According to a data from the Solvent Extractors? Association of India, edible oil imports rose 14.5% to 4.82 million tonne in the 11 months ended Sept. 30.

Purchases in September rose 9% to 623,208 tons from a year-ago month. Palm oil makes up 90% of the country?s total purchases of edible oils.

Harvesting of the monsoon crop, which accounts for more than 60% of India?s oilseed output, began last month. Winter- sown crop, the planting for which will begin next month, makes up for the remainder of the production.

Output of kharif oilseeds may decline to 17.95 million tons this year from 19.84 million tonne a year ago, as dry weather forced farmers to plant fewer acres, according to the government.

India buys palm oil from Indonesia and Malaysia, and soybean oil from Argentina and Brazil.

Edible oils prices in international markets have more halved since then with the benchmark crude palm oil prices in Malaysia ruling at below 2,000 ringgits per tonne from a high of over 3,500 ringgits in May.

Meanwhile, sources said the farm ministry has also favoured re-imposing the import duty on cotton and re-starting exports incentive under the duty entitlement passbook scheme. In July, government scrapped the import duty on cotton and withdraw the export benefits under DEPB to discourage overseas sales and curb local prices.

However, since then cotton prices have dropped by more than 35% in the local markets because of fall in international rates and is currently being sold at below the minimum support price in many states.

Cotton imports attracted 10% basic customs duty and 4% special additional duty. Sources said the government could also review the directive that required registration of some varieties of cotton with the textile commissioner prior to their exports.