India expands curbs on rice exports with 20% duty on parboiled grade

India has imposed a 20% duty on exports of parboiled rice with immediate effect, a move that could further reduce shipments from the world's largest exporter and lift global rice prices, which are already trading near their highest levels in 12 years.

Last month, India surprised buyers by imposing a ban on exports of widely consumed non-basmati white rice, following a ban on broken rice exports last year.

The ban prompted some buyers to increase purchases of parboiled rice and lifted its prices to record highs, said a Mumbai-based dealer with a global trade house.

"With this duty, Indian parboiled rice would become as expensive as supplies from Thailand and Pakistan. There is hardly any option for buyers now," the dealer said.

India exported 7.4 million tons of parboiled rice in 2022.

In July, the United Nations food agency's rice price index jumped to its highest level in nearly 12 years as prices in key exporting countries jumped on strong demand after India imposed restrictions on the exports. India accounts for more than 40% of world rice exports, and low inventories with other exporters mean any cut in shipments could inflate food prices already driven up by Russia's invasion of Ukraine last year and by erratic weather.

India has now imposed restrictions on all kinds of non-basmati rice, which poor consumers in Africa and Asia usually prefer, said a New Delhi-based dealer with a global trade house.

"Global rice prices had begun to moderate in the last few days after rallying more than 25% due to India's restrictions last month. However, prices are expected to rise again," the dealer said.

The recent curbs on exports of food commodities demonstrates the sensitivity of the government of Prime Minister Narendra Modi to food inflation ahead of a general election nearly next year.

His administration has extended a ban on wheat exports after curbing rice shipments in September 2022. It also capped sugar exports this year as cane yields dropped.