India Scraps Rice Import Duty

by Mary Swire, Tax-News.com, Hong Kong

30 October 2009

India's Central Board of Customs and Excise has announced it is lifting the country's 70% rice import tax for a year because of deteriorating weather conditions.

According to the Press Trust of India, the measure applies to semi-milled or wholly milled rice, whether or not polished or glazed.

The move was necessitated after increasingly tight restrictions on rice exports and the build up of government rice stocks to a record high of 17.2 m tonnes last month had failed to stem the growth of local prices. At about USD275 per tonne, local prices are still below international levels and large rises in imports are therefore not expected.

India was hit by the worst monsoon in forty years this year, and the country's rice exports have reportedly reduced progressively from 4.54m tonnes in 2005/6 to an estimated 1.5m tonnes this year.

Bumper crops in Thailand and China have not prevented the global demand from outpacing global supply for the first time since 2006, according to US Department of Agriculture statistics.

The present Indian government was elected earlier this year on the platform of, amongst other pledges, cheaper food prices, but food price inflation has already been worsened by shortages in sugar and pulses. The Indian authorities already lifted import duty on white sugar in April this year, in addition to exempting all overseas purchases of raw (or unprocessed) sugar free of re-export obligations.

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