Indian exporters expect domestic rice supply to improve under revised OMSS policy

Indian exporters expect the country's domestic supply will improve following government revisions to the Open Market Sale Scheme (OMSS), which involves offloading 4.8 million metric tons from its inventory through auctions to state governments and private parties, sources told Platts, part of S&P Global Energy, on July 3.

This move is likely to ease current market tightness and, indirectly, weigh on local rice prices, sources said.

Indian rice prices have been firm amid supply tightness as Platts assessed India 5% WR at $357/mt July 3, $18/mt up month on month.

Under a notification released by the Ministry of Consumer Affairs, Food and Public Distribution on July 2, 1.6 million mt will be sold to state governments at Rupee 23,200/mt ($244/mt) until Oct. 31. An additional 3.2 million mt will be auctioned at Rupee 23,900/mt until June 30, 2027.

Separately, Food Corporation of India will sell 25% broken rice to private parties at rates as low as Rupee 26,600/mt for the Kharif marketing season 2023-24 (October-September).

For the 2024-25 season, rice will be sold at Rupee 28,000/mt, while rice for the 2025-26 season will be auctioned at Rupee 28,900/mt.

"Current local price for 25% WR for Kandla port delivery is around Rupee 30,000/mt, which means FCI's old-crop rice will likely be sold at much lower levels in the domestic market," a Nagpur-based exporter said.

A Delhi-based trader added that the revised OMSS could soften Indian non-basmati prices as local availability increases. "We may see further price reductions under OMSS," the trader said.

Some market participants were more cautious about the impact.

"The OMSS 2026-27 update is intended to improve domestic rice availability and contain food inflation through a controlled release of government stocks," a Gurgaon-based trader in a multinational company said. "The main market effect should come from additional availability of whole rice and broken rice over the coming weeks, especially through discounted older-crop stocks and the new dynamic pricing mechanism for brokens."

They further noted that while this may ease some domestic tightness, strong ethanol demand, limited paddy availability, and active export demand are expected to continue supporting the overall rice market.

According to the report, under the previous policy, FCI offered rice to ethanol players at Rupee 22,500/mt, a level that has been increased to Rupee 23,200/mt in the current policy until Oct. 31, which further increases to Rupee 23,900/mt until June 30, 2027.

A Delhi-based trader said the immediate impact will depend on the quality of the older stocks that FCI releases.

Before drawing conclusions on prices, it will be important to sample the supply, the trader said.