Is India banning rice export? What impact will India's ban on rice exports have on global importers?

Is India banning rice export? What impact will India's ban on rice exports have on global importers?

India has recently imposed a ban on the export of non-basmati rice, leading to concerns in global rice markets. According to India's Directorate General of Foreign Trade, this restriction is applied due to a significant increase in the domestic prices of rice, primarily caused by lower rainfall in key rice-producing regions.

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The ban affects about 80% of India's rice export, mainly non-basmati rice consumed by the majority of the population. The scarcity of non-basmati rice for export may impact international rice markets, causing shortages and pushing prices higher.

Reason behind the rice export ban :

The main reason behind the export ban is a recent 20% increase in rice prices in India, attributed to lower rainfall in major rice-producing areas. With rice being a staple for approximately 80 crore (800 million) people in India, the government aims to ensure sufficient domestic supply and control rising prices.

The international impact :

The international impact is significant, as India contributes to 40% of the global rice trade. The ban has led to shortages in various countries, including the United States, where people are queuing at stores, and rice prices have surged from $22 to $32-$47.

The ban's repercussions extend to Vietnam, a major exporter, and may lead to increased rice prices globally. Some countries, like Indonesia, have already initiated discussions with the Indian government to secure rice through government-to-government contracts.

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Increase rice price :

As a consequence of the export ban, India's non-basmati rice prices may decrease domestically, but the global effect could be a rise in rice prices due to reduced supply from India. 

UN statement on rice export ban :

The United Nations' Food and Agriculture Organization suggests that such export restrictions diminish confidence in international trade dependency, encouraging countries to seek direct deals with governments to ensure stable rice supply.

Start of July, India had a reserve of 41 million tons of non-basmati rice, enough for local use, government trading, and public distribution. In the coming days, Vietnam will begin harvesting its main crop, easing global rice supply concerns. Yet, there may still be an impact on rice prices worth noting.

In conclusion, India's decision to restrict non-basmati rice exports has stirred concerns in the global rice market, potentially causing shortages and price hikes worldwide. This move emphasizes the delicate balance between national food security measures and the interconnectedness of international trade.

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