Rice Exporters Push for Budget Sops and Interest Subvention to Boost India’s Global Competitiveness

Rice Exporters Push for Budget Sops and Interest Subvention to Boost India’s Global Competitiveness

Indian rice exporters have stepped up their lobbying efforts ahead of the Union Budget 2025-26, urging Finance Minister Nirmala Sitharaman to announce a package of fiscal support measures that can help the industry stay globally competitive while also pushing it towards a more sustainable, value-added future. At the heart of their demand is a combination of interest subvention, freight support, tax-linked incentives for climate-smart cultivation, and relief from past duty disputes that they argue are squeezing margins and discouraging fresh investment in the sector.

The Indian Rice Exporters Federation (IREF) has asked the government to provide a 4 percent interest subvention on export credit, with special priority to MSME exporters who are often the most affected by high working capital costs and delayed realisations in global trade. According to the representation made by IREF president Prem Garg, such support would directly reduce financing costs, ease cash flows and enable exporters to quote more competitive prices in global tenders, especially at a time when other rice-exporting nations are also using fiscal tools to support their agri export sectors. The federation has coupled this with a call for reimbursement of 3 percent of eligible domestic freight on road and rail for rice moving from production clusters to ports and inland container depots, arguing that India’s inland logistics costs are significantly higher than some rivals and that even a small percentage support could materially improve realisations from inland regions.

These fiscal asks are being made against the backdrop of India’s dominant position in the global rice trade and the strategic role of exports in the broader rural economy. India now accounts for roughly 40 percent of world rice trade and exported about 20.1 million tonnes of rice to more than 170 countries in 2024-25, making it not just a commercial powerhouse but also a key player in global food security. IREF has stressed that rice exports are a “strategic economic asset” because they support farm incomes, sustain rural employment and contribute to the external sector, while also bolstering India’s diplomatic leverage in food-importing regions of Asia, Africa and the Middle East. Sustaining this leadership, the federation argues, requires a policy mix that recognises both the foreign exchange earnings and the socio-economic spillovers of a thriving rice export ecosystem.

However, the industry’s appeal to the finance ministry is not merely about cost competitiveness; it is also heavily framed around sustainability and structural stress in the paddy ecosystem. Major rice-growing belts have been grappling with groundwater depletion, rising procurement and storage costs for the government, and increasing market volatility linked to global price swings and export policy changes. In its pre-budget submission, IREF has therefore sought tax and investment incentives that are explicitly linked to the adoption of water-saving and low-emission practices such as Alternate Wetting and Drying (AWD), Direct Seeded Rice (DSR), laser levelling and energy-efficient milling technologies. By tying fiscal benefits to verifiable sustainability metrics, the federation believes the government can simultaneously incentivise resource conservation, lower the carbon footprint of rice, and improve the long-term resilience of paddy cultivation in water-stressed regions.

A second pillar of the proposed reforms is a deliberate shift towards higher-value rice segments so that both farmers and exporters can earn more per tonne without necessarily expanding acreage. IREF has called for targeted incentives to encourage acreage towards premium basmati, GI-tagged, organic and other specialty non-basmati varieties that typically fetch higher prices in international markets and can reduce the fiscal pressure of minimum support price (MSP) procurement on the exchequer. Better realisation for such varieties, the federation contends, would translate into improved farm incomes, reduced dependence on government procurement and a more diversified export basket less vulnerable to commodity price shocks.

On the policy side, the exporters have also flagged the importance of continuity and predictability in duty remission schemes that are central to India’s export pricing. They have asked for the continuation and fine-tuning of RoDTEP (Remission of Duties and Taxes on Exported Products) benefits for rice, arguing that these remissions are vital to offset embedded taxes and levies that cannot be refunded through other mechanisms, and therefore are crucial for preserving India’s price edge in intensely competitive markets. Delays in the disbursal of such benefits, they warn, directly hit working capital and can force exporters, especially smaller ones, to scale back volumes or shift to lower-risk markets.

Perhaps the most sensitive ask in IREF’s budget wishlist is for a one-time waiver of retrospective duty demands that arose after the imposition of a 20 percent export duty on certain rice varieties. The federation has highlighted that inconsistent interpretations of the duty base and calculation methodology across different field formations and exporters led to what it describes as inadvertent discrepancies, even when shipments were made in good faith and without any undue gain to the trade. These retrospective demands have triggered prolonged disputes and litigation, tying up capital and creating uncertainty that makes long-term contracting difficult; a waiver, IREF says, would immediately ease stress on compliant exporters, reduce avoidable legal battles and restore confidence in policy stability.

Complementing these fiscal and regulatory demands is a push to fortify India’s reputation in premium rice markets through stronger institutional and financial infrastructure. IREF has urged the government to strengthen export finance guarantees and invest in modern testing, traceability and quality assurance systems that are now mandatory for access to high-value destinations with strict sanitary and phytosanitary norms. Better compliance infrastructure, in their view, will not only minimise rejections and reputational damage but also enable Indian exporters to command higher prices for value-added products that meet demanding retail and institutional standards abroad.

In essence, the rice exporters’ pre-budget representation portrays a sector at a critical inflection point: globally dominant yet facing rising ecological stress, cost pressures and policy uncertainty that could erode hard-won market share if not addressed in time. By seeking a calibrated mix of interest support, logistics incentives, tax-linked sustainability drives, predictable duty remission and relief from past disputes, the industry hopes the upcoming Union Budget 2025-26 will lay the groundwork for a more competitive, climate-resilient and value-driven rice export ecosystem that continues to anchor rural livelihoods and India’s standing in global food trade.