India mulls MEP removal on white rice exports amid stiff competition from Pakistan

The restrictions on Indian rice exports are set to ease further, as the current minimum export price of $490/mt FOB on white rice exports is expected to be removed soon, sources told S&P Global Commodity Insights Oct. 17.

The move is likely to enhance the competitiveness of Indian white rice in the global market leading to an expected boost in exports and trade activities, sources said.

A team of delegates from the Indian Rice Exporters Federation met Minister of Commerce Piyush Goyal on Oct. 17 to discuss the export policy issues restricting Indian rice trade.

The members requested a complete waiver of 10% duty on parboiled rice and removal of MEP on white rice amid concerns over stiff competition received from Pakistan and other markets leading to Indian white rice being traded below MEP by over invoicing.

“Government representatives have agreed that MEP on white rice will be removed shortly, however, they remain noncommittal on the removal of export duty on parboiled rice,” Dev Garg, vice president of Indian Rice Exporters Association said.

India slashed the export duty on parboiled rice from 20% to 10% on Sept. 27 and lifted the ban on non-basmati white rice exports but introduced a minimum export price of $490/mt the following day.

Indian white rice remains less competitive at MEP

Platts assessed Indian 5% white rice at $490/mt FOB on Oct. 17, at a premium of $8/mt over Pakistani 5% WR, however, it remains at a discount of $25/mt to Thai 5% WR and $39/mt to Vietnamese 5% WR.

“The government is also keeping track of local and international prices and as compared to other origins India (rice exports sector) might not survive at $490/mt level,” Jatin Mahajan, the trading manager at Adani Wilmar Limited said.

Upon implementation of such a move, the market participants don’t anticipate major changes in the market as white rice is already trading below MEP.

While one exporter noted that white rice prices in the local market would go up by Rupees 500/mt ($5.9/mt), another source said that any price movement at this level is quite minimal and is usually experienced by traders and exporters, hence prices of white rice are unlikely to be affected in a significant way.

This period also coincides with an influx of fresh crop harvests from all origin markets, including India, which anticipates a bumper harvest, likely to set bearish sentiments in the markets due to increased supply pressure.

India is forecast to export 20.5 million mt of rice in the marketing year 2024-25 (October-September), up 37% on the year, Commodity Insights data showed.

Market awaits potential lifting of export restrictions

A Delhi-based source, who wished to remain anonymous, raised concerns about the possible corruption after the removal of the MEP on basmati rice, which had led to a sharp increase in exports. This unusual rise suggests that some basmati rice is being mislabeled as non-basmati, allowing dishonest traders to benefit while genuine exporters suffer. The source also mentioned the potential mislabeling of parboiled rice as white rice and called for the removal of MEP on white rice and export duty on parboiled rice to prevent further issues. They emphasized that if rice is available at $450/mt, buyers will not be paying $490/mt, suggesting the government may lift these restrictions soon to address the situation.

A Thailand-based source stated that removing the MEP would be beneficial, as many Thai millers believe the price of Indian rice is $490/mt. However, Indian sellers are offering below the MEP, making it difficult to communicate the actual prices. The source said that Thailand’s parboiled rice market would suffer significantly, with prices likely to crash globally, not just in Thailand. They explained that since 50% of Thailand’s rice crop is exported, prices must drop to boost sales, or exports will be negatively affected. Currently, there is no demand for Thai rice at the prices being offered.

Platts assessed Thai 5% broken white rice at $515/mt FOB Oct. 17, up $5/mt on the week, to below offers received.

Lower prices may shift demand to India

A Davao-based importer mentioned that they prefer Vietnamese rice over Indian rice due to concerns about the quality of Indian rice and the longer shipping time from India to the Philippines. However, if Indian rice prices are significantly lower and the quality improves, they would consider buying from India or Pakistan. Otherwise, if the price difference isn’t substantial, they will continue to choose Vietnamese rice because of the shipment advantage.

Platts assessed Vietnamese 5% broken white rice on Oct. 17 unchanged at $529/mt FOB on the week, to below offers received.

The removal of MEP on WR is likely to intensify competition among major rice-exporting countries, resulting in lower prices and prompting buyers to explore more competitive sourcing options.