India to Explore White Rice Export Deal with Indonesia

India to Explore White Rice Export Deal with Indonesia

India to Explore White Rice Export Deal with Indonesia

India is considering signing a memorandum of understanding (MoU) with Indonesia, one of its key diplomatic partners, to sell up to 1 million tonnes of white rice annually. This initiative comes as Indonesia seeks to secure its food security against disruptions caused by the El Nino weather pattern and difficulties in rice supplies, particularly from Vietnam, its current major supplier.

Background of the Proposal

India had imposed a ban on non-basmati white rice exports on July 20, impacting its existing exports. This move, however, does not prevent the government from granting export permissions when it’s requested by other countries to meet their food security needs.

Indonesia, self-sufficient in rice production, relies on MoUs to ensure supplies during uncertain times in meeting its domestic demand. While it currently has MoUs for white rice supply with Myanmar, Pakistan, Thailand, Cambodia, and Vietnam, it is now considering India as an alternative supplier, proposing an MoU to procure up to 1 million tonnes of white rice annually from India, subject to availability.

Terms of the Proposed MoU

The proposed MoU is designed to address Indonesia’s current challenges without imposing binding commitments on India. It makes supply contingent on production in both countries and allows either party to terminate the agreement with a 6-month notice period. The MoU is also clear in stating that it does not create international legal obligations.

Implications and Opportunities

This MoU could potentially boost India’s rice exports to Indonesia when favorable export conditions exist, diversify the trade basket, and help reduce the trade deficit. India, as an alternate supplier to Indonesia, can reduce its reliance on Vietnam, Thailand, and Pakistan, thereby enhancing its standing among other rice buyers in the ASEAN region. Indonesia remains India’s largest trading partner in ASEAN, with significant trade volume, including palm oil imports.

Moving Forward

The discussions are still in an early stage, and the proposal will be presented to relevant authorities before seeking approval from the cabinet committee.

This initiative underscores India’s readiness to collaborate and ensure regional food security in the face of changing global conditions.