India Considers Lifting Rice Export Curbs as Supply Improves

(Bloomberg) -- India, the world’s biggest rice exporter, is likely to lift restrictions on grain shipments in a move that would mark a further easing of a global wave of 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. Government stockpiles are adequate to meet the needs of welfare programs, said the person, who asked not to be identified as the information is private.

India accounts for about 40% of the global rice trade. Any relaxation of the export curbs will likely cool benchmark prices in Asia, which are trading near the highest since mid-2021. The move is being discussed as concerns over food inflation have eased. Global food costs ended 2022 roughly where they started despite a year of disruptions from the war in Ukraine and extreme weather.

A spokesperson for the food and commerce ministries declined to comment. 

India imposed a 20% duty on exports of white and brown rice in September, 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. 

Shares of Indian rice producers and exporters surged Tuesday on expectations that any change in shipment rules will potentially boost their sales. KRBL Ltd., one of the biggest shippers, climbed as much as 3.2%. LT Foods Ltd. rose 4%, while Chaman Lal Setia Exports Ltd. jumped 5.4%.

Rising Global Food Protectionism Risks Worsening Inflation

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

Increased availability of the grain helped the government to boost its purchases for various welfare programs. The federal agencies have bought 53 million tons of unmilled rice as of Jan. 1 from the 2022-23 crop, an increase of 11% from a year earlier, according to data compiled by the state-run Food Corp. of India.

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

(Updates to add share prices and procurement figures in sixth and eighth paragraphs)

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