Centre and traders divided over deciding the market price of onions and rice

As India tries to boost domestic supplies of food grains and onions by restricting exports through levying customs duty and other steps, exporters and government officials are divided on what is the correct market price of the commodities on which the tax is calculated.

The lack of a proper system to calculate the tax, say both sides, is being misused by some traders for under-invoicing to nullify the impact of customs duty and illegal shipment of banned commodities.

At present, customs duty is calculated on the value of the commodity shown by the exporter in the invoice.


“The value of onions shown by some exporters at Kolkata is $150/tonne, while the transport cost of onions from Nashik to Kolkata is $140/tonne. This implies that the exporter purchased onions at Re 0.80-1.00/kg, while the current price of the export quality onion is Rs 23-24/kg,” said an exporter of onion from Maharashtra, who requested not to be identified.

Meanwhile, sensing the misuse of the system in the export of non-basmati parboiled rice, the government said on Sunday that only the export contracts having a minimum price of $1,200/tonne will be cleared for shipments under the basmati rice category.

India has imposed a 20% customs duty on parboiled rice and banned the export of non-basmati white rice. But there have been allegations that parboiled rice was being shipped out of the country without paying any duty, by claiming it to be basmati, but pricing at a much lower price than what the premium rice variety commands.

While the government said the average value of basmati rice exported in August was $1,214/tonne, the All-India Rice Exporters Association (AIREA) claims that more than 80% of the basmati rice exported from India was priced less than $1,100/tonne.

“The average price of basmati rice exported in FY 2022-23 was $1,049/tonne, while the average price during the first quarter of the ongoing fiscal was $ 1,106/tonne,” said AIREA executive director Vinod Kaul.

Both onion and the rice exporters have now demanded that the government fix customs duty on per kilogram of the commodity exported instead of the value shown in the invoice.

“Fixing an absolute amount of customs duty for every kilogram of the non-basmati parboiled rice will help remove any ambiguity about calculating the customs duty. We have a similar system in place for import of almonds,” said rice exporter Vijay Setia.

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