Bangladesh slaps 28% tax on rice imports

Dhaka/Mumbai (Reuters): Bangladesh is imposing a 28% tax on rice imports to support its farmers after local production revived, Finance Minister Abul Maal Abdul Muhith said on Thursday.

The duty hike would reduce imports, especially from neighbouring India, which emerged as the biggest supplier to the South Asian country last year after floods ravaged its crop.

“This year we have a bumper production in rice, thus to protect local farmers, 25% customs duty and 3% regulatory duty has been re-imposed on rice importation,” Muhith said in his budget speech for the 2018/19 fiscal year.

Bangladesh had cut a previous import duty of 28% in two phases in 2017 to 2% after domestic rice prices climbed to a record high.

Bangladesh’s rice imports rose to a record 3.7 million tonnes in the July-April period, data from the country’s food ministry showed.

“Re-imposing tax on rice import was needed to curb imports. Otherwise, our farmers would have affected and could have lost interest in rice cultivation,” Badrul Hasan, the head of Bangladesh’s state grain buyer, told Reuters on Thursday.

The inventory and bumper crop would be sufficient to cater local demand, he said.

The country’s production for 2018/19 as a whole is expected to recover to 34.7 million tons, up 6.3% year-on-year, according to estimates from the US Department of Agriculture attache in Bangladesh.

Indian exporters said they were going to lose competitiveness due to the duty hike.

“Imports would be very expensive for buyers now. Instead, they will prefer local crop,” said a New Delhi based dealer with a global trading firm.

India’s rice exports surged to a record high 12.7 million tons in the 2017/18 year to 31 March due to robust demand from Bangladesh.

Bangladesh recently cancelled a deal with India to import 150,000 tons of rice due to a delay in shipments.