India Weighs Removing Restrictions on Rice Exports as Supply Increases

India, one of the world's largest rice exporters, is expected to lift restrictions on grain shipments. This would mark a further easing of global food protectionism after Russia's invasion of Ukraine.

Authorities are actively considering removing curbs on some rice exports as domestic prices are stable, according to a person familiar with the matter. The person, who asked not to be identified as the information is private, said that government stockpiles are adequate to meet the needs of welfare programs.

Approximately 40% of global rice trade is from India. If export curbs are relaxed, it would likely lower benchmark prices in Asia, which are currently trading near the highest they have been since mid-2021. This is being discussed as concerns over food inflation have eased. Global food costs ended 2022 around where they started, despite disruptions from the war in Ukraine and extreme weather.

The spokesperson for the food and commerce ministries declined to comment when asked about the situation.

In September, India imposed a 20% duty on shipments of white and brown rice, and banned broken rice sales abroad. The curbs, which apply to about 60% of Indian rice exports, came on top of restrictions on wheat and sugar sales.

The risk of worsening inflation due to rising global food protectionism is a real concern. Countries are increasingly imposing tariffs and other restrictions on food imports in an effort to protect their own domestic producers. This protectionism is driving up food prices around the world, and is likely to lead to even higher inflation in the months ahead.

The Rice Exporters Association has called on the government to scrap some limits on exports, as domestic supplies have increased following the harvest of monsoon-fed crops. The industry group has sought approval to ship at least 1 million tons of broken rice and requested that the 20% tax on white rice exports be removed, according to B.V. Krishna Rao, president of the group.

Officials are also considering selling about 2 million tons of wheat from state reserves in the local market to help control prices, according to one person familiar with the matter. This wheat may be sold at a fixed price to users including flour mills, the person said.