Restrictions on the export of paddy and seeds from India to Nepal have been in effect since October 7 under its revised foreign trade 

policy about which information has become available only recently.

Ministry of Commerce Secretary Naindra Upadhyay and officials from the Ministry of Agricultural Development said they had no knowledge about the change in Indian policy. The reason behind the shift is also not known.

According to India’s Directorate General of Foreign Trade, shipments of paddy of seed quality and rice in husk have been moved from the “free” to the “restricted” category. Under the new policy, exports of paddy and seeds are permitted under licence. However, there is no restriction on rice exports. 

“The exporters should submit documents to customs at the time of export and they should have a licence to carry on the business of a dealer in seeds issued under Section 3 of the Seed Control Order (1983) from the state government,” the statement of the new policy issued by Anup Wadhawan, director general of Foreign Trade, said. 

Traders need to declare that the export consignment of seeds has been chemically treated and is not fit for human consumption; and export packets will be labelled that seeds are treated with chemical insecticides and cannot be used for food or feed purposes, according to the policy. Nepali rice mills have expressed concern over India’s new exports policy. According to Nepali traders, the new policy has allowed Indian traders who have been exporting paddy for the last three years to export 200 tonnes of paddy per month. The quota is enough to fulfil only 10 percent of the requirement of mills, they said. 

“Our paddy output can meet the requirement of rice mills for only three months,” said Subodh Gupta, vice-president of the Birgunj Chamber of Commerce and Industry. “If the restriction is not lifted, it will affect a large number of rice mills that depend on imports from India.”   

Gupta, who is also the managing director of Mohit Agro Industries, said that the Indian government’s restriction on exports would put the Rs10-billion investment of rice mills at risk. There are 250 rice mills in Bara and Parsa. 

Traders said that domestic rice mills would be affected more as the country’s paddy production has been projected to drop 10 percent this fiscal year. 

According to government statistics, Nepal imported agro products worth Rs137.12 billion in the last fiscal year 2014-15. Of the total imports, cereals amounted to Rs35.12 billion. 

Out of the total shipments, rice and paddy amounted to Rs14.78 billion (338,512 tonnes) and Rs9.01 billion (345,618 tonnes) respectively.  

On October 9, 2007, India’s Cabinet Committee on Economic Affairs had banned exports of basmati rice, citing a decline in stocks, two weeks after India decided to ban the export of non-basmati rice

However, in December 2008, India allowed shipments of up to 15,000 tonnes of non-aromatic rice to Nepal, partly easing the ban on exports of food grain. In 2010, it was further eased to annual exports of 25,000 tonnes of non-basmati rice. The Indian government totally lifted the ban on rice exports to Nepal on September 9, 2011.