Govt mulls cutting duty on rice import to tame prices: Officials

The government is considering reducing the import duty on rice in an effort to stabilise rice prices in the country.

Sources at the finance, commerce, and food ministries indicate that this decision is being contemplated due to recent floods that severely impacted paddy cultivation.

Major agricultural areas, including Chattogram, Feni, Noakhali, Laxmipur, and Cumilla, were flooded, and currently, Rangpur, Sherpur, Lalmonirhat, Netrokona, and Mymensingh are facing flood. These regions are vital rice producers for the country.

As a result, rice prices have risen significantly in the local market, causing difficulties for consumers.

According to commerce ministry sources, the price of various types of rice has increased by 8% to 10% recently.

"In this situation, the government aims to control prices and stabilise the market through rice imports. An initiative is underway to reduce the import duty on rice," said a finance ministry official wishing not to be named.

Currently, rice imports are subject to a 62.50 percent customs duty. The food ministry has requested the National Board of Revenue (NBR) to lower this duty to 5 percent. A letter was sent by Joint Secretary Lutfar Rahman to the NBR on 29 September.

The letter highlighted that the food ministry is working to ensure food security through improved management and the provision of safe and nutritious food. To support food security and incentivise farmers, a target of 500,000 tons of paddy and 14,700,000 tons of rice has been set for the current Boro season.

By 31 August, 296,970 tons of paddy and 1,255,497 tons of rice had been collected. Currently, the government's storage holds 12,64,740 tons of rice and 4,63,928 tons of wheat, totaling 1,754,199 tons of food grains.

However, after the floods, rice prices have risen sharply at the production, wholesale, and retail levels. In response, the Ministry of Food, Directorate of Food, National Directorate of Consumer Protection, and local administrations have increased market surveillance to control prices. Fair market monitoring and operations against illegal stockpiling are ongoing, but food grain prices have continued to rise.

The food ministry also noted that recent floods in 14 districts have caused severe damage to Aoush, Aman seedlings, and Aman seedbeds. The demand for rice, coupled with reduced supply, could push prices even higher. Additionally, India's wheat export ban, reduced wheat imports due to the Russia-Ukraine war, and rising global food prices have contributed to the surge in grain prices.

In this context, stabilising the rice market and increasing the government's safety stock is essential. Private-level rice imports may also be necessary. The government has already received approval to import 500,000 tons of rice.

Although the global rice market is currently priced higher than the domestic market, reducing the existing rice import duty from 62.50 percent to 5 percent is seen as a necessary measure to maintain price stability.

Currently, rice imports are subject to a 25 percent customs duty, 25 percent regulatory duty, 5 percent advance income tax, 5 percent advance tax, 1 percent insurance, 1 percent landing charge, and 0.5 percent DF VAT.

India recently reduced its rice export duty from 20% to 10%. If Bangladesh reduces its import duty to 5%, a combined duty of 15% will apply to rice imports from India.

The food ministry's letter emphasised that this reduction in duty will encourage importers to meet domestic demand. The ministry has requested the NBR to take the necessary steps to reduce the duty on non-basmati parboiled rice and non-scented Atap rice for both public and private imports.