Rice export curb fears spark scramble for LCs
NEW DELHI : Large rice companies, traders and exporters are rushing to secure letters of credit (LCs) for future shipments, fearing that rising prices may trigger export curbs on non-basmati varieties, three people aware of the matter said. Securing LCs will enable these entities to export rice varieties even after the announcement of a ban, as seen earlier in the case of the ban on broken-rice exports in September last year. Concerns of export curbs and the additional LCs may push up India’s overall rice exports in July.
An executive at a rice exporter said their company has opened LCs worth ₹10 crore so far in July, twice as much as in June. “The rumour, whether true or not, has created some business-related fear among non-basmati traders and exporters. As a result, they have started issuing as many LCs as possible.
So have we," the executive added. Rice prices have risen 20-30% in the past three months, and about 10% over the last 20 days. Ratna rice is being sold at ₹35-36 a kg, Miniket variety at ₹45 per kg, Kolam at ₹53-54 a kg and Sona Masuri at ₹50 a kg.
This has sparked worry that government may ban exports of all non-basmati rice varieties ahead of the 2024 general elections. India, the world’s largest rice exporter with a contribution of about 40% in global trade, shipped 4.5 million tonnes (mt) of non-basmati rice in April-June, against 4.3 mt despite a 20% export duty in place since September 2022. While export curbs move may lower domestic prices, it may also impact about 80% of India’s rice exports, and drive up global prices.
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