India, in 2022-23, exported 22.3 million tonnes (mt) of rice valued at over $11.1 billion. The Narendra Modi government’s decision on Thursday to ban all non-basmati white rice shipments will effectively take away some 9.9 mt from the world market. Henceforth, only two categories of rice — basmati and parboiled non-basmati, aggregating 12.4 mt and worth $7.8 billion in the last fiscal — will be allowed to go out. The move has both domestic and global implications. The world’s total rice exports was 55.6 mt in 2023-23, with India’s share at more than 40 per cent, according to the US Department of Agriculture. India’s role in the global rice trade is, in many ways, similar to that of Indonesia and Malaysia in palm oil. While rice has more suppliers — Thailand, Vietnam, Pakistan, US and Myanmar — they cannot fill the vacuum left by India. A surge in world prices is, therefore, inevitable.
The latest decision follows a series of actions, starting with a ban on exports of wheat last May and then on broken rice in September, which was accompanied by a 20 per cent duty levied on other non-parboiled non-basmati shipments. Exports of sugar have also been stopped after May this year. All these measures — retrograde no doubt — have been in response to domestic supply concerns. The Modi government is clearly worried about the current rice crop, given the subnormal monsoon rainfall in major growing states. While some — including Telangana, Andhra Pradesh, Odisha and Chhattisgarh — have received good rains in the past one week, the effects of delayed plantings on yields remains to be seen. No less a source of uncertainty is El Niño, which can impact the monsoon’s second-half performance and, in turn, the fortunes of the kharif rice as well as the upcoming rabi wheat.
While imposing export curbs may be justified under exceptional circumstances, the government must be mindful of two things. The first is credibility. Why ban exports of wheat and much of rice if India’s production of both cereals touched all-time-highs in 2022-23, as per the Agriculture Ministry? It raises questions on the reliability of official output estimates. Remember how last year’s export ban on wheat came not long after claims about India “feeding the world”. The second is its image as a reliable global supplier, including to countries in Africa and West, South and Southeast Asia. Building markets takes time and effort, which can be undone by just the stroke of a pen. If at all exports are to be discouraged in order to contain domestic inflation, the right way is to impose a tariff or a minimum price below which shipments aren’t permitted. Blanket export bans hurt more than help.
