Column: What course must India’s rice import take?

Sep 03 2014, 02:13 IST
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SummaryImporting rice for Tripura and Mizoram doesn’t seem easy, but it is also a $450 million opportunity for trade

For the first time, FCI is compelled to import rice for the north-eastern states of Tripura and Mizoram, owing to temporary interruption in railway lines rather than lack of availability of rice. Monthly consumption of these two states is 40,000-50,000 tonnes, or about half a million tonne per annum.

Indian Railways is commencing gauge conversion of a 220-km track from Assam to Agartala (Tripura) from October 1, 2014, while the highways in the region are in a shoddy state. Imports for the next two years—about 1 million tonnes—through alternative routes are a necessity rather than an option. Also, due to absence of trucking-worthy cross-border routes, imports may have to be diverted through the Chittagong port in Bangladesh.

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The current cost of procuring Indian rice is R2,755 per quintal and despatch expenses are R3,200 per quintal to Tripura from north or south of India. It totals R59,550 per tonne, or about $975, as against the $375-385 per tonne landed value of 25% broken Myanmar rice if supplied through Yangon port to Chittagong. After accounting for unloading at Chittagong, transit storage, shortage, demurrage, road transport of about 200 km to Agartala, financing charges, etc, it should not cost more than $450-460 per tonne delivered at the FCI depot in Agartala. A 0.5 million tonne import will be approximated at about $225 million (R1,370 crore) per year versus the R2,977 crore incurred under local arrangements. The apparent cost saving is 55%. But it is going to be logistical and procedural nightmare to handle this import.

FCI is attempting to engage three PSUs (PEC, MMTC and STC) for this import while they are not well-versed with the scope of the work involved. Normally, these PSUs finalise bids, contracting and shipments to Indian shores, hand over grains to FCI and transfer payments to foreign suppliers. But, in this case, Indian PSUs may not be able to deal effectively with customs/phyto-authorities of Chittagong, handling agents and transporters of Bangladesh. Port authorities in Chittagong can delay berthing/discharging vessels for India-bound cargo due to their own local priorities. Trucks can be in short supply as a 25,000-tonne parcel requires 2,500 trucks (10 tonne per truck). Agreements by rice handling agents or transporters may be breached. Pilferages may be attempted both during storage and transit. Even Bangladesh’s own wheat imports have 2-3% short-landing as a routine occurrence, for which they deduct payments of shippers.

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