However, there will be no change in export policy for non-basmati rice and basmati rice, which account for the majority of exports. Non-basmati white rice accounts for about 25% of the country's total rice exports. The Directorate General of Foreign Trade of India has announced that the export policy of non-basmati white rice (partially or fully milled rice, whether or not polished)... has been revised from free export to prohibited export.

So why is India banning the export of non-basmati white rice? According to the government, the move is intended to ensure lower prices and sufficient stock during the upcoming holiday season. Domestic rice prices are on an upward trend. Retail prices have increased by 11.5% in a year and 3% in the past month as stated by the Food Ministry of India.

Previously, the government imposed an export tax of 20% on non-basmati white rice from September 8, 2022 to control prices as well as ensure supply in the domestic market. However, exports of this type increased to 42.12 thousand tons in the period from September to March 2022-2023 from 33.66 thousand tons in the period from September to March of the previous fiscal year.

In the first quarter of the current fiscal year, about 15.54 thousand tons of white rice were exported compared to only 11.55 thousand tons in the same period last year, that is, an increase of 35%. This strong increase in exports can be attributed to high international prices due to geopolitical factors, El Nino and extreme climatic conditions in other rice producing countries, etc.

Alerted to this trend, the Indian government intervened to ban exports to ensure sufficient stocks and low prices ahead of the approaching festive season in India. The move can also be seen as the countdown to the parliamentary elections in major states like MP, Rajasthan, Chhattisgarh and Telangana as well as the 2024 Lok Sabha elections has begun.

How will India's move to ban rice exports affect the world? India is the world's second largest rice producer after China and accounts for more than 40% of the world's rice exports. This move caused an instant increase in the price of rice in the global market. Industry experts claim that the ban is expected to drive up prices of food products globally, which have been pushed up by the Ukraine war that started last year and erratic weather.

China's rice crop was also severely damaged by extreme weather. Rice is the staple food of more than 3 billion people and nearly 90% of water-intensive crops are produced in Asia, where El Nino weather patterns typically bring lower rainfall. Global prices have hovered at an 11-year high.

The main markets for Indian rice are African countries. China, India, Thailand, Vietnam and Pakistan are the leading producers and major suppliers of rice globally. According to media reports, Thailand and Vietnam do not have enough inventory to make up the shortfall. Experts say African buyers will be most affected by India's decision.

According to reports in the US, rice purchases have accelerated as anxious Asian communities, for whom rice is a staple, flock to stores. Stores of major brands also saw similar competition. All types of rice including basmati rice were sold out in a few hours on July 21.

In states like Texas, where large numbers of Asians live, prices have skyrocketed. The erratic weather conditions certainly contributed to the Indian government's decision to ban rice exports. While the late monsoon resulted in a major shortage of rainfall until mid-June, the heavy rains since the last week of June have caused significant crop damage, mainly in Punjab and Haryana.

It is estimated that 2.4 thousand hectares of rice cultivation area has been affected in Punjab alone and the crop will be replanted on 83,000 hectares of land. However, farmers will have to wait for the water to recede before they can replant. In Haryana, too, the rice crop spread across 1.5 thousand hectares of land in seven districts was flooded. This is not good as the two states together contribute about 20% of the total rice production of the country. In other major rice-growing states, farmers have prepared rice nurseries but cannot transplant seedlings due to insufficient rain. The Indian government had hoped that rice acreage would increase after increasing the MSP for rice, but farmers have so far planted rice on 6% less acreage than in 2022.

The numbers speak for themselves about India's role in the global rice market: India accounts for more than 40% of world rice exports , reaching 55.4 million tons in 2022. India's rice exports hit a record 22.2 million tons in 2022, more than the combined exports of the world's next four major grain exporters - Thailand, Vietnam, Pakistan and the US. India exports rice to more than 140 countries. Major importers of non-basmati rice from India include: Benin, Bangladesh, Angola, Cameroon, Djibouti, Guinea, Ivory Coast, Kenya and Nepal. Iran, Iraq and Saudi Arabia mainly buy premium basmati rice from India.

India exported 17.86 million tons of non-basmati rice in 2022, including 10.3 million tons of non-basmati white rice. In September 2022, India banned the export of broken rice and imposed a 20% tax on the export of all kinds of rice. New Delhi has not introduced any restrictions on the export of basmati and parboiled rice, at 4.4 million tons and 7.4 million tons in 2022, respectively.

Indian farmers plant rice twice a year. Summer planting starting in June accounts for more than 80% of total production, which is 135.5 million tons in the 2022-2023 crop year. During the winter months, wet rice is mainly grown in the central and southern states. West Bengal, Uttar Pradesh, Andhra Pradesh, Punjab, Odisha and Chattisgarh are the main rice producing states of the country.

To boost the area under rice cultivation, India has increased the purchase price of new regular rice from farmers by 7% to 2,183 rupees ($26.63) per 100 kg. But industry officials fear the area under rice cultivation could decline slightly in 2023 due to the erratic distribution of monsoon rainfall. The late monsoon leads to a large shortage of rainfall until mid-June.

And while the heavy rains since the last week of June have erased the shortfall, they have caused significant crop damage. India's move has pushed rice prices from some Asian countries higher in global markets, while traders said they expect prices to rise significantly in the coming days. Thailand and Vietnam, the world's second and third largest rice exporters, respectively, have also experienced a recent 5% broken rice price hike. Even before the announcement, Vietnam's rice was trading at its highest level since 2011 and has since moved higher, while Thailand's rice variety has soared to levels not seen in more than two years.

The global food supply has been affected by the war in Ukraine, sending commodity and grain prices worldwide soaring. Russia's decision to withdraw from the United Nations -brokered Black Sea grain initiative , which ensures the safe passage of grain ships, has raised new fears of a global food crisis.

In the wake of the Kremlin's move, grain prices have fallen by more than a third (35 percent), while wheat prices are down 14 percent since January and corn prices are trading 20 percent lower. The United States has committed to providing an additional $250 million to create and expand other routes for Ukrainian grain to be exported, but the Russian Defense Ministry said any ships leaving a Ukrainian port would be a legitimate military target, raising concerns that supplies could face further disruptions. The disruption to Ukraine's grain exports comes as key growing regions in the US have been hit by unusually hot weather and a lack of rain, leading to a drop in US wheat harvest forecasts, with estimated stocks falling to a 16-year low.