India’s 20% Rice Export Tariff Worries Nepal

Nepal’s Rice production decreased by 8.7 percent to 5.1 million tons in 2021, a five-year low mainly due to damage caused by unseasonal rains. The country cultivated Rice paddy on 1,477,400 hectares of land last year, about 4,000 hectares more than the previous year.

Paddy production contributes around 50 percent to total cereal production. Rice is grown in three distinct major agroecological zones, which are Terai and Inner Terai (60-900 masl), mid hills (900-1,500 masl), and Mountains/high hills (1,500 – 3,050 masl).

Nepal imports Rice from India, China, Vietnam, and Thailand. They imported 550,000 metric tons of paddy, 520,000 metric tons of Rice, and 50,000 metric tons of Rice grits from India last year alone. Regarding value, Nepal imported Rice worth Rs29 billion, and paddy shipments amounted to Rs17 billion.

Not only Rice, but Nepal is also importing a whopping amount of cereals; in the first three quarters of this fiscal, the country imported cereals worth nearly Rs62 billion, making the grains the fifth largest import item of the country, according to the data from the Trade and Export Promotion Centre.

Minister for Industry, Commerce, and Supplies insists that the country needs to increase domestic production and consumption and that the Government is ready to introduce economic and monetary policies to address this need.

Accordingly, the National Seed Board of Nepal approved the release of seven new Rice varieties for cultivation in 2022, namely Ghaiya-3, Hardinath-4, Hardinath-5, Hardinath-6, Khumal Basmati-16, Ganga Sagar-1, and Ganga Sagar-3. The newly released cultivars have multiple traits, including high-grain production, good grain quality, and resistance to pests and diseases. Some are flood and drought-tolerant and have 20% higher nitrogen-use efficiency.

They also have high nutrient-use efficiency compared to other improved varieties, reducing greenhouse gas emissions and pollution from Rice production and improving their environmental footprint. Moreover, all of these are inbred Rice varieties. Green Super Rice is two of the seven released Rice varieties, Khumal Basmati-16 and Hardinath-5.

After four decades, new site-specific fertilizer recommendations for Rice were introduced in Nepal to help farmers increase the crop’s productivity by 10-30% compared to their current practices. The Ministry of Agriculture and Livestock Development endorsed the new fertilizer recommendations for Rice crops at a consultative workshop in July 2022 held in Kathmandu. The International Maize and Wheat Improvement Center, in close collaboration with the National Soil Science Research Center and International Fertilizer Development Center, developed it. 

Other Markets for Nepal’s Rice Importers 

Last week, the Indian Government imposed a 20% duty on White and Brown Rice shipments and banned Broken Rice sales abroad. The variety that now attracts the export tax accounts for about 60% of India’s non-basmati Rice shipments, according to B.V. Krishna Rao, President of the Rice Exporters Association. The restrictions apply to unmilled and husked brown varieties. Semi-milled and wholly-milled Rice or White Rice will incur a similar duty. Parboiled and Basmati Rice are excluded from the curbs. 

Dr. Subodh Gupta, Central President of Nepal Rice, Oil, Lentil Industries Association, said India’s latest decision is unfair to the industries, traders, consumers, and the market in Nepal. Gupta expressed worry that the latest decision by India might lead to a situation that would lead to the closure of the Rice mills in Nepal. He also called on the Government to address the problem at the earliest. The additional duties will make Rice, Nepal’s staple food, more expensive to consumers who were braving high inflation.

Rice traders fear that consumers will be hit hard. At the same time, experts say that Nepal needs to look for alternative markets to import Rice, like Thailand, Myanmar, Cambodia, Malaysia, and other Rice-producing countries.