Government help sought by traders as Indian rice shipments stay stuck at ports

A surprise move by India on September 8th to ban exports of broken rice and to impose a 20% duty on exports of various other types resulted in cargo being trapped in Indian ports. Traders have now asked the government for help.

At least 20 ships were reported as waiting in Indian ports, looking to load around 600,000 tonnes of rice.

Sellers have been forced to pay demurrage charges, industry officials told Reuters.

India, the world’s biggest exporter of the grain, is trying to boost local supplies and to calm prices after below-average monsoon rainfall curtailed planting.

BV Krishna Rao, president of The Rice Exporters Association (TREA) said that “we have requested the government to provide concession to this transitional cargo as we are paying hefty demurrage charges”.

Apart from the 600,000 tonnes rice waiting to loading at berthed vessels, a further 400,000 tonnes of rice is stuck at port warehouses and container freight stations (CFS) even though contracts are backed by letters of credit, Krishna Rao said.

Although white rice exports are not banned, buyers and sellers are not willing to pay the 20% duty over the agreed price, dealers said. “When contracts were signed there wasn’t any tax on the exports. Since exports now attract the tax, there is dispute who will pay the tax over the agreed price,” a New Delhi-based dealer with a global trading firm told Reuters.

In the past the Indian government has provided exemptions for contracts backed by LCs issued until the day the government made a policy change. But that has not happened this time.

The stuck broken rice shipments were planned to head for China, Senegal and Djibouti, while other grades of white rice had already been bought by buyers in Benin, Sri Lanka, Turkey and the UAE, exporters said.