Parboiled rice exports slow on confusion over duty calculations: Dealers

Indian traders are signing few new contracts for exports of parboiled rice after customs officials changed the calculation method for the 20% export duty, resulting in a higher duty, four industry officials told Reuters.

In August, the world's largest rice exporter imposed a 20% duty on parboiled rice exports, following a ban on white rice exports to control domestic rice prices ahead of key state and national elections in 2024.

Krishna Rao, president of the Rice Exporters Association told Reuters that the new calculations on duty were causing confusion.

"Previously, a 20% duty applied to the Free on Board (FOB) value. However, customs now require a 20% duty on the transactional value, leading to a higher cost for exporters," he said, adding that the exporters have requested clarification from the government.

The finance ministry did not immediately reply to requests for comment.

Exporters were this week offering the 5% broken parboiled variety around $450, excluding duty. However, the price soared to a record high of $560 with the duty, effectively translating to a customs duty of more than 24%, dealers said.

The 20% duty slowed India's parboiled rice exports, but still traders ship around 500,000 metric tons per month as prices jumped in competing countries such as Thailand, Vietnam, Pakistan, and Myanmar.

Exporters were forced to pay higher duty in the last few weeks for already signed contracts because of the new way of calculating the duty, said a New-Delhi based dealer with a global trade house.

"Buyers were not willing to pay the difference, which was eventually paid by sellers. We are trying to convince buyers to pay a higher price for the new contracts, but they are resisting paying a higher price," the dealer said.

India exports parboiled rice mainly to African countries such as Benin, Djibouti, Guinea, Liberia, and Togo.

To eliminate confusion between buyers and sellers, the government should implement a flat duty of approximately $100 per ton on parboiled rice exports, said an exporter based in the southern state of Andhra Pradesh.