India Imposes Rice Export Ban Triggering Global Inflation Fears

27 July 2023

In the latest development to the global food crisis, the Indian government has banned the exports of non-basmati white rice which may trigger inflation fears. This was seemingly in response to both a rise in domestic prices and decreased sowing in several key rice-producing states because of erratic monsoon season. Rice is a staple food for about half of the world’s population, with Asia consuming about 90% of the global supply.

Why India is crucial to the global rice trade?

India accounts for around 40% of global rice exports, which exported rice worth USD 10,766 million in 2022. India’s rice shipments in 2022 were more than the combined shipments of Thailand, Vietnam, Pakistan, and the United States, the next big exporters of grain. The given chart shows India’s share in global rice exports.

A large number of countries are net importers of Indian rice. Iran, Saudi Arabia, China, Benin, the United Arab Emirates, Senegal, Côte d'Ivoire, Iraq, Yemen, Nepal, Togo, Guinea, and the United States of America are the major importers of Indian rice. Here is a list of countries that imported Indian rice in 2022 with values and percentage shares.

India’s rice exports 2023 outlook

India exported rice worth USD 7,546 million in the first two quarters of 2023. The rice exports from India declined from USD 1,470 million in January to USD 1,096 million in June 2023. Only March month reported positive growth in rice exports. Visualize data to understand the growth of India’s exports of rice in the first half of 2023. 

Monsoon 2023: The late arrival of the monsoon led to a large rain deficit up to mid-June. The last week of June recorded heavy rains that erased the shortfall and caused significant damage to crops. The area under paddy could drop marginally in 2023 because of erratic monsoon rainfall distribution.

Price of rice to go higher?

In addition to a reduction in global rice supply, panic reactions and speculation on global rice markets would exacerbate the increase in prices. Since Russia’s invasion of Ukraine in 2022, the price of major grains including rice, wheat, corn, and other seeds has already surged in the global market and India’s non-basmati rice export ban would further push the rate of inflation up.

Wheat prices jumped this week after Russia withdrew from the Black Sea grain deal. The agreement sought to prevent a global food crisis by allowing Ukraine to continue to export. According to a report, global rice inflation has already accelerated from an average of 6% year-on-year last year to nearly 12% in June 2023.

Based on the request of their governments, permission will be granted to states to export rice to other countries to meet their food security needs. The latest Indian government move, which has already imposed restrictions on wheat and sugar exports, would affect a larger portion of the global rice trade.