How India's Rice Export Bans Could Impact Regional Trade

The BIMSTEC - Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation – country group consists of Bangladesh, Bhutan, India, Nepal, Sri Lanka, Myanmar, and Thailand. Together, these countries are home to more than 712 food-insecure people, and the prevalence of food insecurity has increased in the majority of the region since 2014. Given this food security situation, India’s recent export ban of non-basmati white rice and export duty on parboiled rice raise significant concerns for the region.

A new IFPRI Policy Note looks at the likely impacts of these export restrictions on BIMSTEC countries and identifies four major impact categories: rice prices, supply chain disruptions, food security, and trade relationships.

BIMSTEC Context

Rice makes up an important part of diets throughout the BIMSTEC region. The proportion of rice in daily caloric intake across the majority of the countries is over 30 percent, with Bangladesh standing at 66 percent.

Three countries – India, Thailand, and Myanmar – are rice exporters, while Bangladesh, Bhutan, Nepal, and Sri Lanka rely on imported rice to varying degrees. Rice exports from India are particularly important to these countries; the report emphasizes that the volume of Indian rice imported by Bangladesh, Bhutan, Nepal, and Sri Lanka could not be easily made up for by other exporting countries. This means that any disruption to rice supplies from India – such as those stemming from export restrictions – would have negative implications for rice availability and food security in these countries.

Impact Pathways

One major channel through which India’s export restrictions would likely impact BIMSTEC companies is through increased rice prices. With Indian rice exports reduced, global rice supplies would also decline. In response, other rice exporters would likely increase their prices. Rising prices would put additional strain on food affordability and food security for BIMSTEC countries, particularly for poor and vulnerable populations.

A second impact channel is rice availability. India exports around 40 percent of the global rice supply; reductions in those exports would represent a significant supply chain disruption. As pointed out previously, BIMSTEC countries are particularly reliant on Indian rice imports and would be challenged to secure supplies from other exporters. This could lead to reduced rice availability throughout the region.

Both of the foregoing channels – rising rice prices and declining rice availability – have clear negative implications for food security. This is especially true for Bangladesh, Sri Lanka, Bhutan, and Nepal, where rice makes up a significant proportion of the food consumption basket. These food security impacts mean the region, which already experiences high rates of food insecurity, will be even more vulnerable.

Finally, the report highlights that Indian export restrictions could have a cascading effect on trade relations in the region. Other BIMSTEC countries may look to renegotiate existing trade agreements or form new trade agreements to help stabilize rice imports.

Policy Recommendations

The report concludes with several policy recommendations to help BIMSTEC countries manage future challenges like that they’re facing with India’s current rice export restrictions. These include expanding trade relationships, both within the BIMSTEC group and with other countries, to diversify food import sources; establishing a regional rice reserve to help soften the impact of future supply chain disruptions; and re-evaluating export policies to strike a better balance between ensuring domestic food security and maintaining stable regional markets.