Rice exporters in India are uncertain what to do about shipments committed to by letters of credit (L/Cs) before the authorities banned the export of non-basmati rice.

In some instances, the L/C documentation agreed before the ban calls for delivery of rice on dates during the ban.

Uncertainty

Despite repeated representations at various levels and reports that the authorities will ease export controls on non-basmati rice, local media is reporting that exporters with pending export commitments are uncertain what to do.

The authorities meanwhile appear committed to the ban. The Assistant Commissioner of Customs at Kakinada port - from where many shipments are due to take place -has already announced that no loading of non-basmati rice will take place from the port without further orders.

Retrospective question

The ban was notified by the Director General of Foreign Trade on 15 October, but was made effective from 9 October, raising questions over the legality of banning export retrospectively.

Non-basmati rice exports are usually shipped on free-on-board (FOB) terms, and payment is usually against submission of export documents, although in some cases L/Cs have been established too.

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