The growing demand for rice is expected to be a big boost for exporters of the commodity in India. Even though Bangladesh is the third-biggest rice producer in the world with 35 million tonnes a year, it depends on imports from other countries to deal with shortages caused by natural disasters like floods and drought.
Recently, Bangladesh has become India’s fourth biggest export destination in the current calendar year. India’s exports to the neighbouring country have increased 46 per cent on an annual basis at $3.16 billion during January-March 2021. Bangladesh has secured the fourth position as top export destination for India, after the US ($15.41 billion), China ($5.92 billion) and UAE ($5.34 billion). Bangladesh has achieved the status as one of the top export destinations for India largely due to New Delhi’s diplomatic efforts, logistical ease and robust demand for Indian farm produce in that country.
The surge in farm exports to Bangladesh for FY21 is driven by record-high sales of rice i.e. 13.9 million tonnes of non-basmati and 4.6 million tonnes of basmati. Whereas in FY 2019-20 Bangladesh has imported nearly 9 lakh tonnes of non-basmati rice at an estimated cost of about $30.65 million. The growing demand for rice is expected to be a big boost for exporters of the commodity in India. Even though Bangladesh is the third-biggest rice producer in the world with 35 million tonnes a year, it depends on imports from other countries to deal with shortages caused by natural disasters like floods and drought.
Bangladesh invites global tenders for rice imports
Bangladesh has invited seven global tenders for the import of 3.10 lakh tonnes of rice in January 2021 including two 50,000 tonnes and one 10,000 tonnes orders. Apart from these tenders, Bangladesh is set to import another 2.5 lakh tonnes of rice from India, which includes 1.5 lakh tonnes through government-to-government deals and others through exporters.
Indian firms, including a subsidiary of the Singapore-based company, have won five tenders, quoting rates between $405 and $418 a tonne on cost, insurance and freight (CIF) basis. While the lower bids are for non-basmati parboiled rice, the higher quotes are for white rice.
The state-owned National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) has decided to supply one lakh tonnes of the non-basmati parboiled rice to Dhaka, as part of this bilateral deal.
It is noteworthy that a large chunk of rice exports from India to Bangladesh are contributed from West Bengal and the majority of the exports take place during the September to February period. The boost in rice exports has also helped other major rice producing states like Telangana and Andhra Pradesh.
As the momentum continues, other rice exporters from India have risen up to the occasion to grab the opportunity, and there is a steady growth in terms of exports from India to Bangladesh over the recent years. Bangladesh has recently allowed private traders to import one metric tonne of rice, apart from reducing the rice import duty. These measures could help augment Indian shipments to Bangladesh.
“There are no specific problems. Bangladesh reduced import duty last year from 62 per cent to 25 per cent which enabled large volumes to be shipped. This is also reflected in growing volumes. In April 2021 movement was almost 50 per cent of what was shipped during the whole of 20-21” said Tarlochan Singh Ahluwalia, president, All India Rice Exporters Association (AIREA).
Of late, non-Basmati rice exports to Bangladesh are on the rise. The reason cited for its growth is that non-Basmati rice is exported in break-bulk vessels, while the Basmati is carried using containers only. There is a huge shortage of containers recently; this, in turn, has affected rice shipments as non-availability of containers leads to high ocean freight rates.
Volumes of Rice Exports from India to Bangladesh (in Metric Tonnes)
| Rice | 2018-19 | 2019-20 | 2020-21 | 2021-22 (Apr) |
| Basmati | 2,284 | 2,398 | 3,435 | 541 |
| Non Basmati | 4,80,567 | 13,083 | 9,11,868 | 4,28,668 |
Factors helping India emerge as a major exporter to Bangladesh
According to Bangladesh food department officials, the import of rice to Bangladesh may exceed 20 lakh tonnes, and India, one of the largest rice exporters in the world, may emerge as the clear beneficiary.
The reasons for India clearly emerging as the obvious choice for rice exports to Bangladesh include competitive prices compared two Thailand and Vietnam, the second and third largest exporters, and freight charges are cheaper as India is a neighbouring country to Bangladesh. Rice from Thailand and Vietnam is exported at over $400 for a tonne, whereas rice produced in India has remained at a reasonable level with a record production of the grain. Moreover, Myanmar, another leading exporter of rice in the world in recent times has been grappling with internal unrest following a coup, which made it out of the market.
Mode of transport for the exports from India to Bangladesh
When it comes to the shipment of the exports from India to Bangladesh, rice exporters don’t find too many issues, as there are several modes of transport available to Bangladesh including railway, road, and waterways.
“Majority shipment is by railway rakes only. But with growing volumes since rake availability has become a little issue, minor quantities have been shipped through ocean and land route as well” saidTarlochan Singh Ahluwalia.
“As you are aware we have the contract to transport the commodity to Bangladesh. Currently, we are doing two shipments of 12,000 tonnes each per month via our handysize vessels Tvisha and Tuhina”, said Ranjit Singh, CEO, Essar Shipping.
When asked about the cost difference between land and sea routes, Ranjit Singh said that “A differential cost of freight via land & sea normally for large quantities is in the range of 50 per cent along with a reduction in movement of the large volume of trucks (10 tonnes average load) & Co2 emissions”.
“Our operations have been smooth and we are grateful to the governments of India and Bangladesh and the port authorities for their constant support for flawless execution of this contract”, Ranjit Singh added.
The Indian exports have shown an upward trajectory in recent times. According to the latest data released by the Ministry of Commerce and Industry, govt. of India, the merchandise exports during April-June 2021 augmented to $95.36 billion, registering an upsurge of 85.36 per cent over the same period in April-June 2020. The agricultural and allied products export from India grew by 17.34 per cent to $41.25 billion in 2020-21. The same growth momentum is expected to be reflected in the current fiscal year also with impetus from the upsurge in the rice exports.
