The rice trade between India and Singapore, once considered a model of cooperation, now faces turbulent waters. At the heart of the issue lies a divergence of interests between India’s National Cooperative Export Ltd (NCEL) and Singapore’s rice aggregator, compounded by tightening customs procedures. Understanding the intricacies of these challenges is essential to grasp the complexities of this vital trade relationship.
India’s cooperative sector, represented by NCEL and backed by prominent organizations such as Gujarat Cooperative Milk Marketing Federation (GCMMF), commonly known for its Amul brand, has long been a stalwart in facilitating agricultural exports. They are set to export 1,600 tonnes of white rice to Singapore.The other promoters are Kribhco, IFFCO, NAFED and National Cooperative Development Corporation.
However, recent disagreements with Singapore’s aggregator have cast a shadow over the smooth functioning of this partnership. While NCEL prioritizes the efficient export of rice, the aggregator’s insistence on higher margins threatens to derail negotiations, potentially leaving Singapore vulnerable to rice shortages by June.
Adding to the complexity are the tightening procedures imposed by Customs officials at key ports like Chennai and Thoothukudi VOC Chidambaranar ports. These measures, though intended to curb malpractices like under-invoicing, have inadvertently slowed down the export process. With only 250 tonnes of rice shipped to Singapore since March 1st, concerns about meeting Singapore’s rice demands are mounting.
Singapore has to have 50,000 tonnes of rice as stocks that can take care of three months’ con-sumption. Just 250 tonnes in March and no one is sure how much rice has been shipped to Singapore in February. That leaves the situation precarious for Singapore,” said a New Delhibased trade source.
The situation escalated following India’s government authorization of 50,000 tonnes of white rice exports to Singapore last September. However, the aggregator’s subsequent tendering for 13,750 tonnes of rice, including various varieties like idli rice, Sona Masuri, Ponni and ADT 36, raises questions about the alignment between approved quotas and procurement actions. Such discrepancies have triggered speculation among trade observers about the adequacy of Singapore’s rice stocks.
Another trade source said, “The situation seems to be a bit serious. Otherwise, why should the aggregator engage firms such as Louis Dreyfuss or Olam or any other firm that has no presence in the Singapore domestic mar-ket?”
Tax Demands & Underinvoicing crisis in Rice Trade
Moreover, allegations of under-invoicing and subsequent tax demands on exporters have further complicated matters. The tightened customs procedures, aimed at addressing these issues, have inadvertently led to delays in clearing shipments. This delay not only impacts exporters’ bottom lines but also adds up to the challenges faced by importers in meeting their rice requirements.
Reasons Behind the Delays,
- Conflict Over Profit Margins: Apparently, the Singaporean aggregator sought a significantly higher margin of nearly 8% on rice sales. This stands in contrast to the standard margin of less than 2%. NCEL’s refusal to accept these inflated margins has stalled progress.
- Stricter Customs Procedures: In a bid to curb under-invoicing, a practice where exporters deliberately undervalue their goods to pay lower customs duties and illegal hawala trade, a money transfer system often used for illicit activities, Indian customs authorities have tightened procedures. While this crackdown is commendable, it has unfortunately led to delays in shipment clearances.
Amidst these challenges, finding common ground between NCEL and Singapore’s aggregator is crucial. Collaboration, rather than contention, is key to ensuring the smooth flow of rice from India to Singapore. Moreover, addressing the concerns raised by both parties regarding margins and procurement practices is essential for restoring confidence in the trade relationship.
Additionally, streamlining customs procedures to balance the need for security with the efficient movement of goods is crucial. Striking this balance will not only expedite the export process but also enhance transparency and trust between trading partners.
Looking ahead, both India and Singapore must recommit themselves to resolving these challenges through dialogue and cooperation. With the global food supply chain facing unprecedented disruptions, maintaining a robust rice trade relationship is more critical than ever. By addressing the root causes of disagreement and streamlining regulatory processes, India and Singapore can chart a path towards a more resilient and mutually beneficial trade partnership in the realm of agricultural commodities.
Looking for more understanding on Rice Trade, Check out : India Lifts Export Ban on Kalanamak Rice: A Shift Towards Specialty Rice Promotion
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