Free export of paddy allowed

Indian rice farmers can finally experience the pleasure of selling in a competitive market as the government allows free export of paddy from India. This means farmers or their cooperatives will now have the option of selling to foreign millers instead of being wholly dependent on local millers and the FCI for a price.
Paddy or rough rice exports form a sizeable chunk of the international rice trade because the grain can be stored for long duration. The US alone ships out more than 20% of its total rice exports as paddy.
Indian rice exporters, however, benefit as well because it may now be more cost-effective for them to set up a rice mill abroad for processing Indian paddy or rough rice if domestic tax laws do not allow sufficient returns on value addition.
Till now, no one could export paddy or rough rice because the government believed it was crucial to encourage only value-added exports.
“Farmers can now choose to sell to the highest bidder — the international trader, local miller, or FCI, depending on who offers the best price. Local millers can no longer afford to be complacent about having a captive supplier base, which will certainly lead to better returns for growers,� exporters here said.
Similarly, Indian millers may now be able to invest in plants abroad for processing Indian paddy. West Asia, particularly Dubai, may become an attractive destination for Indian rice-exporting companies due to its locational and infrastructural advantages.
More importantly, the move provides an escape route for exporters harried by state laws denying adequate input credits. Haryana, for instance, does not allow input credit on paddy used though the rice exported is free of taxes. In such a situation, an exporter can export the paddy and process it more cheaply overseas.