Rice Exporters’ Fate Hangs In Balance

Mumbai: Even 15 days after publication of the official notification banning export of non-basmati rice, exporters are running from pillar to post trying to ensure that their pre-ban commitments are fulfilled.

As many as 11 ships are still waiting for clearance for loading. Each day of delay results in demurrage and detention charges of over $10,000. Close to four lakh tonnes of export cargo are lying in and around Kakinada port in Andhra Pradesh. Exporters are losing hope; and indeed, many are losing faith in the Government’s desire and ability to extend assistance.

Instead of addressing the genuine concerns of rice exporters, the bureaucracy is attempting to frustrate the trade on basis of technicalities, an aggrieved party complained to Business Line.

Proof of contract

A most irksome condition is the insistence on Letter of Credit (L/C) as evidence of pre-ban commitment. To be sure, in the export policy, opening of an L/C was never a pre-condition to ascertain the genuineness of an export contract. There are instances where L/Cs have been opened; there are instances where advance has been received against export order; and in some cases, exporters have applied to banks for pre-shipment packing credit. Any of these, should be sufficient proof of an export contract.

In an extreme case, one exporter loaded most of the cargo on to the ship, and only a small lot remained, before which the ban was announced. Now, the Customs authorities are insisting that the exporter produce a L/C or simply unload the cargo already on board the ship. The exporter is shocked by the Customs officials’ response.

Another exporter said that the very fact that export documents have been processed and bulk of cargoes have been loaded on to the vessel should be conclusive evidence of the existence of an export contract.

Exporters are fast losing hope that the Government would soon sort out some of the technical issues. Trade circles are furious that the three ministries concerned with rice exports - Ministry of Commerce, Finance and Agriculture - are working at cross purposes and demonstrate utter lack of co-ordination.

Restricted evidence

Firstly, it is essential to establish the extent of pre-ban export commitment. The evidence should not be restricted to L/C; but should be more liberal to include other forms of sufficient evidence. Unless, the ministries adopt a more open and practical approach, the fate of exporters would continue to hang in balance.

There is apprehension that in the next two to three days most of the ships awaiting cargo will set sail from the port, if there is no definite and clear-cut support to exporters. This is sure to subject defaulting Indian exporters to numerous arbitration proceedings at the international level and possibly, huge amounts of damages to be paid by them.

Meanwhile, rice procurement has been going on in a somewhat tardy fashion. Even after imposition of the ban and sullying the image of Indian exporters, there is doubt if the procurement target would be achieved.