Indian rice exporters are contending with unexpected tax demands from the customs department, which could significantly affect India’s rice exports. The demands relate to duty differentials on rice exported over the last 18 months, with claims arising after the imposition of a 20% export duty on white and parboiled rice to stabilize domestic prices before upcoming elections. Four exporters have disclosed that the customs department is asking for additional payments based on the transaction value of the exported rice, rather than the Free on Board (FOB) value that was initially used for duty calculations. This change has led to concerns about the viability of continuing rice exports due to the financial strain of retroactive duty adjustments.
Exporters argue that the additional costs, estimated at around $15 per metric ton for rice shipped in the past two years, are unsustainable, given the tight profit margins in the rice export business. The total impact of these duty revisions could amount to approximately 15 billion rupees. The Rice Exporters Association is seeking dialogue with the government to discuss the impracticality of the backdated duty demands and to suggest a consistent duty framework for future exports. Some exporters, faced with the prospect of hefty financial outlays, are considering legal action to contest the tax demands.
India, as the world’s leading rice exporter, primarily ships non-basmati rice to markets including China, Bangladesh, and several African nations. The current tax dispute poses a risk to the country’s position in the global rice market and has sparked concern among stakeholders in the export community.
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