Import duty on rice scrapped till Sept 2010

The Centre has scrapped import duty on rice till September 2010 to augment domestic supply, as the twin-impact of drought and floods have deepened fears of a dip in output by as much as 16 million tonnes this year.

"It is notified that the customs duty (70 per cent) on rice has been scrapped till September 2010," a senior official with the Central Board of Excise and Customs said.

A tax expert said the customs duty has been abolished for "semi-milled or wholly milled rice, whether or not polished or glazed". 

Sources had said in a meeting last month, the empowered Group of Ministers (eGoM) on food, headed by Finance Minister Pranab Mukherjee, had recommended that the import duty on rice be scrapped.

The government had earlier allowed duty-free import of rice between March 20, 2008 and March 31, 2009 as part of its measures to control inflation. The customs duty was restored from April 1.

The latest move came after drought in about half of India and subsequent floods in Andhra Pradesh, Maharashtra and Karntaka ravaged the most important summer-sown crop — paddy.

Rice prices have already shot up by about 25 per cent in the last four months on apprehension about production.

Earlier, Finance Minister Pranab Mukherjee had said rice production could decline by 16 million tonnes this year in view of drought and floods. India produced 99.15 million tonnes of rice in 2008-09.

Though the government has piled up enough reserves of foodgrain — about 47 million tonnes of rice and wheat till August-end — it has scrapped the duty, as fears about a dip in procurement this year looms large.

The government purchased record 33.3 million tonnes of rice in 2008-09 because of a bumper production.