Soon after New Delhi banned the export of ‘broken rice’ on September 8, there was chaos in the ports of Tamil Nadu. Hundreds of containers consisting of various varieties of rice brought for export were held up.
The government had also imposed export duty at 20% on certain varieties of rice, barring basmati rice as well as parboiled rice. Rice traditionally exported as ‘idli rice’ from TN and other southern states is nothing but parboiled rice. The chaos stemmed from different interpretations of what is broken rice and what is parboiled rice by field officers in the absence of appropriate guidelines.
First, while the export of ‘broken rice’ was banned, how a consignment of rice is to be treated as shipment of ‘broken rice’ was not clarified. To what extent broken kernels can be present in the consignment (5%, 25%, 50% or 100%) was left to one’s own imagination and interpretation. Second, transitional measures were not put in place in respect of consignments already brought inside the ports or where documents for export were filed with customs or where the buyers abroad have opened irrevocable letters of credit in favour of the Indian exporters.
After two weeks of these changes, the government came out with a fact-sheet in an attempt to clarify its export policy. It clarified that export of ‘broken rice’ is being banned to meet the domestic requirement of ‘broken rice’ ‘under ethanol blending programme’ and to ensure availability of ‘broken rice’ for domestic poultry sector, as it is used as poultry feed. It said the imposition of 20% export duty was to keep any possible price rise in domestic market due to the likely shortfall in production of paddy for the kharif season 2022. It also clarified simultaneously that there is no change in the export policy for basmati rice as well as par boiled rice. Basmati rice is already subject to export duty.
However, at the field level, there has been no uniformity or transparency in implementation of these measures. When the export consignments of rice contained certain quantum of ‘broken rice’, they were all held up in the ports by the authorities. The commerce ministry was constrained to issue a Trade Notice on September 28 that the tolerance limit for ‘broken rice’ in rice consignments can be decided in terms of ‘The rice grading and marketing rules, 1939’.
Application of these grading rules resulted in more problems and the ministry was forced to withdraw the Trade Notice within a week and consequently, the application of the 1939 rules was abandoned. Another Trade Notice issued on October 4 further clarified that rice (5% and 25%) is not ‘broken rice’ but ‘normal’ rice with permissible limits of ‘broken rice’ as per standards and the same can be allowed with 20% export duty. There is no expression as ‘normal rice’ either in the trade or in different standards applicable for rice.
Rice can be graded in several ways- based on shape like long grain, medium grain, or short grain, based on process, like brown rice (un-milled), white rice (milled), polished or glazed rice, etc. Even in respect of broken rice, commercially, 5% broken rice, 25% broken rice as well as 100% broken rice are available. Therefore, it becomes necessary to specify to what extent broken kernels can be present in the rice categorised as ‘broken rice’ to avoid inconsistency and to bring in clarity and uniformity across various ports.
With regard to parboiled rice, which includes ‘idli rice’, the situation is not better. Any common man will understand what is parboiled rice. Historically, parboiling is practiced in South India for thousands of years. According to dictionaries, it is the rice that has been soaked, steamed and dried before milling.
Already, the quality aspect in respect of basmati rice and testing for the presence of insecticides, moulds and fungi etc., in the case of other varieties of rice meant for export to European countries are taken care by the Export Inspection Agency and Export Inspection Council by issuing inspection certificates before exports take place.
Attempting to impose quality or grading standards for levying export duty, under the mistaken notion of implementing the export restrictions can only hamper these exports leaving the ‘idli’ rice exporters and in turn, the TN farmers in dire straits.
Footnote is a weekly column that discusses issues relating to Tamil Nadu
What’s broken rice?
To what extent broken kernels can be present in the consignment (5%, 25%, 50% or 100%) is left to one’s own imagination and interpretation
The author is an advocate in the Madras High Court