India has lifted the import duty on rice imports after severe weather hit output raising prospects of the world's second largest rice consumer becoming a net importer.
Indian purchases could push up Thai rice prices RI-THWHB-P1 seen as the benchmark for the market from their current $520 a tonne level but are not expected to take them anywhere close to the record high of $1,080 per tonne, they scaled during the food security panic of in April 2008.
But Indian domestic prices continue to remain low and imports would be possible only with government subsidy according to traders. India which is the second-largest producer and consumer of rice after China has not been a significant importer of the commodity at any point in the past.
According to government sources 70 per cent import tax had been scrapped until September next year, the end of the 2009/10 marketing year with the worst monsoon in 37 years followed by floods severely damaging yield prospects across large paddy cultivating regions.
According to a US Department of Agriculture forecast rice output for the marketing year 2009/10 is likely to decline between 15 to 17 million tonnes from a record 2008/09 production of 99.2 million tonnes.
Indian consumption is expected to be around 90 million tonnes in 2009/10 leaving a short fall of 8 million tonnes but some of the deficit would be made up from surplus stocks after bumper harvests in the last two years.