India imposes major rice export ban, triggering inflation fears

India on Thursday ordered a halt to its largest rice export category in a move that will roughly halve shipments by the world's largest exporter of the grain, triggering fears of further inflation on global food markets, Report informs via Reuters.

The government said it was imposing a ban on non-basmati white rice after retail rice prices climbed 3% in a month after late but heavy monsoon rains caused significant damage to crops.

India accounts for more than 40% of world rice exports, and low inventories with other exporters mean any cut in shipments could inflate food prices already driven up by Russia's invasion of Ukraine last year and erratic weather.

"In order to ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market, the government of India has amended the export policy," the food ministry said in a statement that cited a 11.5% increase in retail prices over 12 months.

The category impacted, non-basmati white and broken rice, accounted for around 10 million tons of a total of 22 million tons of Indian rice exports last year.

The government clarified late on Thursday that parboiled rice, which represented 7.4 million tons of exports in 2022, was not included in the ban.

The move demonstrates the sensitivity of the government of Prime Minister Narendra Modi to food inflation ahead of a general election nearly next year.

His administration has extended a ban on wheat exports after curbing rice shipments in September 2022. It also capped sugar exports this year as cane yields dropped.

"India would disrupt the global rice market with far greater velocity than Ukraine did in the wheat market with Russia's invasion," B.V. Krishna Rao, president of the Rice Exporters Association told Reuters.

Rice is a staple for more than 3 billion people, and nearly 90% of the water-intensive crop is produced in Asia, where the El Nino weather pattern usually brings lower rainfall. Global prices are already hovering at their highest level in 11 years.