What are HSN Codes?
HSN codes, or Harmonized System Nomenclature codes, are part of a standardized international system developed by the World Customs Organization (WCO) for classifying traded products. These codes help in identifying products during customs check and are crucial for international trade. Each HSN code describes a specific item under a certain category, making it easier for countries to track, regulate, and tax international shipments.
The Issue with Rice Exports in India
India, one of the largest producers and exporters of rice, recently faced a dilemma. The government temporarily banned all categories of non-basmati white rice exports to control domestic prices and ensure food security. However, this blanket ban impacted all varieties of non-basmati rice, including those not typically consumed in India, like Sona Masuri, Govind Bhog, and Kala Namak.
The Problem with Current HSN Codes for Rice
Currently, India uses only six HSN codes to classify various types of non-basmati rice. However, there are 30-40 different varieties of non-basmati rice grown in the country. This limited classification means that when a ban is imposed on non-basmati white rice exports, it inadvertently affects all these varieties, even those that might not impact the domestic food security as much.
Proposed Expansion of HSN Codes
To address this issue, the Commerce and Industry Ministry is considering expanding the HSN codes for rice. This expansion would allow the government to distinguish between the different varieties of non-basmati rice. By doing so, when there is a need to impose export curbs on a specific type of rice (like the popular staple variety of non-basmati white rice), other varieties that are not of immediate concern can be excluded from such restrictions.
Example to Understand the Impact
Imagine if all fruits were classified into very broad categories like “citrus” and “non-citrus,” and suddenly, due to a disease affecting oranges, all citrus fruits were banned from being exported. This would mean that lemons, limes, and grapefruits would also be banned, even if they were not affected by the disease. This is similar to what’s happening with the rice export ban. By introducing more specific HSN codes, akin to having separate codes for oranges, lemons, limes, etc., the government can impose a ban only on the affected variety (orange in this example) without impacting the others.
Balancing Stakeholder Interests
The government’s decision to expand HSN codes is not straightforward. It requires balancing the interests of all stakeholders, including farmers who grow these rice varieties and the industry that exports them.
For example, while the government wants to prevent domestic shortages of staple rice varieties, it also needs to ensure that farmers have enough incentive to continue producing them. Moreover, with specific HSN codes for unique varieties, such as those with Geographical Indications (GI) like red rice, black rice, and Kalanamak rice, it’s possible to protect and promote these special varieties in international markets without affecting the broader export policies.
Conclusion
Expanding the HSN codes for rice in India is a strategic move to refine export restrictions, ensuring that only the necessary varieties are curbed to protect domestic interests without unnecessarily hindering the export of other varieties. This approach requires careful consideration and consultation with all stakeholders to ensure the sustainability of both the domestic rice market and the export economy.
