The Indian government has unexpectedly banned the export of many types of rice and imposed export taxes on some other varieties. This resulted in the stranding of rice cargoes in transit. Nearly 20 ships were stranded at major Indian ports, waiting to load more than 600,000 tonnes of rice, while sellers were forced to pay hefty demurrage charges for the ships.
The unexpected and sudden ban left exporters bearing the brunt of short-term losses. In addition to the 400,000 tons of rice stranded in port warehouses and container freight stations, there are 600,000 tons of rice waiting to be loaded. Exporters fear they could suffer huge losses if the government demands an additional 20 percent tariff on goods in transit, as international importers are unlikely to pay any extra after the deal is signed.
However, the Directorate General of External Trade of India has sought details on the stranded rice consignments whose agreements and letters of credit (LC) predate the restriction date. In similar situations in the past, the Indian government has granted exemptions for stranded cargo.
On September 8, an announcement was made regarding export restrictions. According to the announcement, broken rice is now prohibited from being exported, while unmilled white rice, semi-milled rice, fully-milled rice, and brown rice husks are subjected to a 20 percent tariff. It is worth mentioning that the renowned Basmati rice variety from India remains unaffected by the ban. Notably, the delayed shipments mainly targeted China, Senegal, Sri Lanka, and the United Arab Emirates.
India's main rice-producing state has seen less rainfall, and the output of rice sown in the summer is expected to fall by 6 percent, according to government estimates. India's finance ministry said curbing inflation and ensuring food security were the top considerations in the decision to limit exports.
