(India) India bans non-Basmati white rice exports, global rice prices rise to 12-year high

India's Directorate General of Foreign Trade (DGFT) issued a circular on July 20 banning the export of non-non-basmati white rice from now on. India has imposed a 20% export tariff on the category since September 2022 and imposed export restrictions on broken rice. India is the world's largest rice exporter, exporting 22.03 million tons of rice in 2021/22, accounting for about 40% of the global rice trade. This tightening has rapidly pushed up international rice prices.

The United Nations Food and Agriculture Organization (FAO) rice price index rose to 129.7 points in July, the highest since September 2011, up 19.7 per cent from a year earlier. The ban mainly hits African countries, Bangladesh, Malaysia and other importing countries that are highly dependent on India's white and broken rice; countries such as Senegal have traditionally been the largest buyers of India's broken rice.

For China, India has been the largest source of rice imports in recent years: in 2022, China imported 2.18 million tons of rice from India, accounting for 35.2 per cent of China's rice imports, of which about 2.02 million tons were broken. The market expects that after the ban, China's rice imports will shift more to markets such as Thailand, Vietnam, and Pakistan, and import costs tend to rise; however, rice imports account for only about 2% of China's rice production, and the direct impact on the domestic staple food market is limited.

The Indian government explained that the restrictions were aimed at safeguarding domestic supply and stabilizing domestic rice prices. India's rice export policy has continued to tighten since 2022, and the protectionist tendencies of the global rice trade have raised concerns among importing countries, and the international community is watching whether India will adjust its policy in the subsequent crop season.

Source: DGFT Circular; Food and Agriculture Organization of the United Nations (FAO);USDA FAS; Reuters, July 2023.