India's Organic Rice Export Scandal: Over 400 Containers Detained at Ports
A major scandal has erupted in India’s rice export sector, leading to the detention of over 400 containers labeled as "organic" rice by the Directorate of Revenue Intelligence (DRI). These containers, held at JNPT, Mundra, and Kandla ports. They are at the center of a growing controversy involving mislabeling and export violations.
The investigation also raised questions about the origin of the rice, with some shipments falsely claimed to be from Sikkim, a fully organic state. The Commerce Ministry contacted certification bodies in Sikkim and Jaipur to probe the certifications provided for these questionable shipments.
The government’s decision to curb rice exports from September 2022, prompted by drought and poor rainfall, has not prevented some exporters from exploiting loopholes. As the investigation progresses, it is expected to lead to tighter regulations and stricter oversight to protect the integrity of India’s organic rice market.
Widespread Export Violations Uncovered
Authorities discovered that non-organic white and parboiled rice had been falsely labeled as organic. From April to July 2024-25, organic rice exports surged to 146,585 tonnes, surpassing the previous fiscal year’s total of 107,727 tonnes. Among these shipments, 127,120 tonnes were white rice, and over 8,000 tonnes were broken rice. These exports violated India’s ban on white and broken rice exports, which has been in place since July 2023. Additionally, exporters managed to dodge a 20 percent export duty on parboiled rice, resulting in an estimated USD 19.2 millions in lost revenue.Investigations and Findings
DRI officials, responding swiftly to the irregularities, focused their scrutiny on JNPT, where they detained over 200 containers. Initial data showed discrepancies in shipments destined for Vietnam and Kenya. Although 22,126 tonnes were headed for Vietnam and 16,547 tonnes for Kenya, only about 2,000 tonnes reportedly reached their destinations. In Kenya, authorities recorded the rice as non-organic, while in Vietnam, some consignments appeared to have been diverted or misdeclared.The investigation also raised questions about the origin of the rice, with some shipments falsely claimed to be from Sikkim, a fully organic state. The Commerce Ministry contacted certification bodies in Sikkim and Jaipur to probe the certifications provided for these questionable shipments.
Exposing the Fraudulent Network
Investigations revealed the involvement of "fly-by-night" operators who attempted to ship non-organic rice as organic. A South India-based exporter disclosed that they had refused a proposal to participate in this fraudulent scheme. Preliminary findings suggest that documents for these "fake" organic rice shipments originated from Bihar and Odisha. Concerns have also arisen about how Customs officials cleared such large volumes without proper verification, despite relying on provisional transaction certificates (TCs) issued by the Agricultural and Processed Food Products Export Development Authority (Apeda).- Apeda's TRACENET system, designed to track and verify organic certifications, has faced scrutiny for its limitations.
- Customs officials, unable to access TRACENET to verify final TCs, may have inadvertently allowed these violations.
- There are now calls for integrating TRACENET with ICEGATE, the Customs electronic commerce portal, to prevent future incidents.
Government Response and Future Measures
The Indian government, including DRI and Apeda, moved quickly to investigate the scandal. The evidence gathered so far points to significant irregularities in organic rice exports from key Indian ports. The scandal draws parallels to previous cases where Chennai and Tuticorin Customs officials uncovered under-invoicing in white rice exports.The government’s decision to curb rice exports from September 2022, prompted by drought and poor rainfall, has not prevented some exporters from exploiting loopholes. As the investigation progresses, it is expected to lead to tighter regulations and stricter oversight to protect the integrity of India’s organic rice market.