August 28: India, which has been imposing taxes on the export of food items one after the other, has imposed a 20 percent export tax even on parboiled rice as the festival of Dashain approaches. It is doing so to discourage exports due to the increase in the price of rice in the country’s domestic market.

The Ministry of Finance of India issued a notice saying that the government decided to impose export tax on all types of parboiled rice till October 16. India has already banned exports of all types of non-Basmati rice, fearing that the production may decrease due to low rainfall in the country's major rice producing areas.

Just a few days ago, India increased the duty on onion export to 40 percent, saying that the price may increase in the domestic market. Due to this, the price of onion in the Nepalese market has skyrocketed. After India tightened rice export, the food supply chain deteriorated worldwide and it is estimated that it can affect the countries that import rice from India including Nepal as India is one of the major exporters of rice in the world.

Kumud Kumar Dugad, president of Association of Nepalese Rice, Oil, Pulses Industry (ANROPI), said that there are signs that India's decision will not affect Nepalese market immediately, but there are signs that it may affect it in the long run. According to him, there is a possibility of resuming the supply of paddy and non-basmati rice through diplomatic initiative to open the export.

“If India opens up exports, there will be no impact, if it does not, there will be a big impact on the Nepali market. If Indian rice does not come, the market will have to bear the impact by Dashain,” he told New Business Age. He said that the demand for rice in the market at present is also low, due to which the price of a sack of rice has decreased by Rs 50.

Just a few weeks ago, the International Monetary Fund (IMF) asked India to remove the ban, stating that it would increase global inflation and increase the fluctuation of food prices in the rest of the world. However, India does not seem to pay much attention to such things.

According to the official of the government-owned Food Management and Trading Company Limited, there is only 9084 metric tons of rice in stock at the moment. Besides, 595 metric tons of paddy is being processed by the company.

The government has written to India through the Ministry of Foreign Affairs to export more than 1.5 million tons of food items, assessing that the supply of food items such as paddy, rice and sugar in the market may be affected due to India's export ban. The letter has requested India to  supply 100,000 tons of rice, 50,000 tons of sugar and 5,000 tons of paddy to Nepal.

Domestically produced rice is not enough to meet the demand in Nepal. About 5.5 million metric tons of paddy is produced in Nepal annually, yielding about 3.5 million metric tons of rice. Officials say that Nepal need about 4 million metric tons of rice throughout the year. According to this calculation, about 500,000 tons of rice should be imported to meet Nepal's rice demand. Even though paddy and rice are imported from more than a dozen countries in Nepal, government data shows that 99 percent is imported from India.

According to the Department of Customs, Nepal imported 22,546 tons of rice and 555,869 tons of paddy in the last fiscal year 2079/80. Other countries that Nepal imports paddy and rice from include China, Bhutan, Japan, Indonesia, Vietnam, Canada, America, Oman, and Thailand.