Indian rice exporters have been issued notices by the customs department demanding payment of duty differentials on rice shipments made over the past 18 months, the news agency Reuters reported citing sources.
This unusual tax demand has the potential to severely impact rice exports from India, it said.
India, the world’s largest rice exporter, implemented a 20 per cent export duty on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023, aiming to stabilise domestic rice prices in anticipation of crucial state and national elections in 2024.
Previously, exporters were required to pay a 20 per cent duty based on the Free on Board (FOB) value of rice. However, the customs department has now mandated exporters to consider the transaction value and settle any resulting duty difference.
According to the report, in tax demand notices reviewed by Reuters, the customs department informed exporters of the obligation to pay the export duty along with applicable interest on amounts received exceeding the declared FOB value in shipping bills.
Exporters expressed concerns over their inability to bear the financial burden of paying the duty difference accumulated over nearly two years, indicating that such demands could lead to business closures.
The government’s new calculation method would entail exporters paying an additional duty of approximately USD 15 per metric ton on rice exported in the past two years, the report said.
Industry estimates suggest that the total cost of this additional duty could amount to around 15 billion rupees.
The Rice Exporters Association intends to engage with the government to argue against the practicality of the current duty demand and propose a fixed duty on future exports to avoid similar complications, according to its president, B.V. Krishna Rao.
Some exporters, based in locations such as Raipur in the central state of Chhattisgarh, expressed readiness to challenge the tax demand in court instead of complying due to the slim profit margins in the rice export business.
India primarily exports non-basmati rice to destinations including China, Bangladesh, and various African countries such as Benin, Djibouti, Guinea, Liberia, and Togo.
