Why are Vietnamese rice exporters required to renegotiate contracts with India?

DNHN - According to the Ministry of Industry and Trade, the General Department of Foreign Trade of India issued Notice No. 31 of the decision to prohibit the shipment of broken rice with the HS code 1006 40 00, effective September 9.

As a result, Vietnam Trade Office in India advises Vietnamese firms who have signed contracts with Indian partners to contact them as soon as possible to check on the delivery status and renegotiate the contract with the unexported items before these changes occur.

Some consignments will continue to be exported until September 15 if one of the following conditions is met: the bill of lading has been issued, the vessel has docked and moored at the port of India, and the ship's stowage number has been assigned; the shipment has been transferred to Customs before the notice and has been registered on the system by Customs.

On September 8, the Indian Ministry of Finance issued Notice No. 49 imposing a 20% export tax on certain varieties of rice such as paddy (HS 100610), brown rice (HS 10620), and others except parboiled rice and Basmati rice (HS 10063090). The verdict is likewise effective as of September 9.

Some exporters complained that the government's decision was too abrupt, producing problems with signed contracts. Buyers are not permitted to pay 20% more than the shipment price, and sellers are not permitted to pay 20% export tax.

"The government's action would enhance world rice prices," stated V.K Rao, Chairman of the Rice Exporters Association of India. White rice export prices might rise to $400 per ton, up from $350 per ton on a free delivery basis."

Indian exporters will request a tax exemption on around 2 million tonnes of rice that has been contracted for export but has yet to be dispatched.

The limitation on rice exports imposed by India is anticipated to raise global rice prices. At the same time, the prohibition on the export of broken rice (a raw material used in the manufacturing of animal feed) would raise the price of animal feed, particularly in China (importing 1.1 million tons in 2021) and Vietnam (importing 433 thousand tons in 2021).

In 2021, India shipped 21.5 million tons of rice, greater than the entire rice exports of Thailand, Vietnam, Pakistan, and the United States combined.

P.V