…Importers are, however, unclear if it is applicable to Bhutan 

Rajesh Rai | Phuentsholing

The price of staple food rice could shoot up 20 percent if the Government of India’s (GoI) new rice export policy is applicable to Bhutan.

The Department of Revenue, Ministry of Finance, GoI, announced on September 8 of imposing a 20 percent export duty on rice. It came into effect on September 9.

As per the notification from the ministry, the duty is applicable to un-milled rice (paddy or rough), husked brown rice, and semi-milled or wholly-milled rice (polished or glazed). Parboiled rice and Basmati rice will not attract this tax.

The move is in line with India’s export restriction on sugar and wheat earlier this year considering the growing global food crisis triggered by the war in Ukraine. However, media reports in India attributed the rice export duty to a decrease in paddy production in India this year.

Bhutan imports semi-milled or wholly-milled rice the most from India. In 2021, the country imported Nu 2.1 billion (B) worth of semi-milled or wholly-milled rice, which is the sixth most imported commodity. In 2020, it was the third most imported commodity accounting for Nu 2.4B.

According to sources, the imposition was not exercised by the customs across the border on September 9 and consignments were allowed. However, they say it will be clear whether the 20 percent tax will be imposed on exports to Bhutan or not, in another few days.

The regional trade office in Phuentsholing has asked some of the major traders in the town to submit the list of rice requirements and some have submitted more than 100 metric tonnes (MT).

An importer in Thimphu, Sonam Tshering said rice brands such as SK Gold and Rajbhog cost Nu 750 and Nu 950 respectively. “However, a 20 percent increase will be for all the rice brands.”

Sonam Tshering said his business is wholesale and the new price (low or high) will be applicable, while the pricing will remain the same in the retail market.

“If we have stock that we imported at Nu 100 and the new price is Nu 80, then we have to sell at the latter price,” he said.

A certain section of the population is also saying that this 20 percent duty imposition may not be applicable to Bhutan considering the bilateral trade agreement between Bhutan and India. If applicable, they are positive India will make special arrangements like it was made for sugar and wheat. India provided a special concession on these two products and allowed Bhutan to import 5,000MT of wheat and 10,000MT sugar after the government requested the GoI to allow the import of these products.

Meanwhile, there is another notification issued by the Department of Commerce, Ministry of Commerce and Industry, India, which prohibits the export of “broken rice.” It says that the current export policy allows “free” export of broken rice.

Importers in Phuentsholing say there are few rice brands such as Dubar, Tibar, and Mini Mongra, which are common among households in Bhutan, and considered broken rice. However, they are not sure if this prohibition will prevent them from importing these brands.

As per the notification, export of broken rice will be allowed until September 15: if loading had commenced before the notification; if the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated before the notification; and if the broken rice consignment has been handed over to the customs before the notification and is registered in their system.