August 4: Import of rice from India has come to a grinding halt as the southern neighbour has stopped exporting rice. After the export quota allocated by India to Nepal for the year 2023 was fulfilled, the import of rice has been stopped since Thursday.

India had earlier added 20 percent tax on exports of rice and paddy. As per the provision, paddy can be imported by paying 20 percent tax, but it won’t be practical to produce rice from paddy imported at high price, says Subodh Kumar Gupta, president of the Nepal Rice, Oil and Lentil Industry Association.

"As the cost of producing rice from paddy imported by paying 20 percent tax is very high, the importers have not imported rice from today (Thursday)," Gupta told New Business Age on Thursday.

As Nepal has already imported 600,000 metric tons of paddy from India under the quota allocated by the Indian government at the request of the Government of Nepal, India has stopped the export of rice.

Gupta says that since 50 kg of rice is produced from one quintal of paddy, the 20 percent tax paid on paddy will double the price of rice. Rice producers have drawn the attention of the government saying that there will be a problem in the supply of rice after the import of rice from India has been stopped.

Gupta said that the Ministry of Industry, Commerce and Supplies has been requested to take the initiative with India to increase the rice quota.

Entrepreneurs have said that an immediate diplomatic initiative should be taken to seek a solution. The rice producers have demanded the government to ask India to increase the quota of paddy to at least 1 million metric tons for Nepal. The government has said that it is studying the proposal and will request India once the required quantity is confirmed.