India’s 5 lakh tonnes of rice shipments postponed after new duty

India's move to impose a 20 percent duty on exports of parboiled rice has prompted buyers and sellers to postpone shipments of around 500,000 metric tons to after mid-October to avoid paying the tax, three leading exporters told Reuters on Tuesday.

The delay in shipments from the world's biggest exporter of rice could deplete inventories in importers such as Benin, Ghana, Côte d'Ivoire, and Liberia, and boost local prices in those countries, which are already near multi-year highs.

India, which is scrambling to rein-in inflation ahead of state elections later this year, on Friday expanded curbs on rice exports with a 20 percent duty on parboiled rice that would be effective until October 15.

"Buyers are postponing the shipments; nobody is willing to pay the duty," said Himanshu Agarwal, executive director at Satyam Balajee, an exporter.

Shipments of around 500,000 tons have been put on hold, said BV Krishna Rao, president of the Rice Exporters Association (REA).

Indian exporters were offering 5 percent broken parboiled variety last week at $450-$455 per metric ton, but since then have raised prices to a record $520 to $540, exporters said, up nearly 40 percent from a year ago.

"Even before India imposed the duty, buyers were uncomfortable with the rising prices. Buyers from African countries can't afford to buy at the current price level," said Rao.

Supplies will improve once harvesting of the summer-sown crop starts from October, which will bring down local paddy prices and eventually export prices of rice, Rao said.

India exported a record 22.2 million tons of rice in 2022, including 7.4 million tons of parboiled rice.

Importing countries have few options since other big producers Thailand, Vietnam and Pakistan have raised prices in recent weeks, said a New Delhi-based dealer with a global trade house.

"African buyers think the best bet is to delay shipments and wait for the price correction," he said.

Lower-income consumers in Asia and Africa previously preferred 100 percent broken rice, exporters said, which was available at $325 per ton, but India banned exports of broken rice last year.

India, which accounts for 40 percent of world rice exports, in July ordered a halt to its largest rice export category, non-basmati white rice, which fuelled a rally in global rice prices.