KARACHI, Oct 6: Sri Lanka has removed import duty on rice with immediate effect to meet its domestic shortfall arising out of bad paddy crop harvested by the country this year.

The decision is likely to give Pakistani rice exporters a chance to command a bigger share in the Colombo market, exporters said.

After the announcement of the removal of Rs9 per kilogram import duty on rice by the Sri Lankan minister a day earlier, the government on Wednesday officially issued a notification in this regard, exporter told Dawn on telephone.

"I hope this will give us the opportunity to recapture the Sri Lankan rice market particularly when we have the advantage of lesser freight charges due to proximity of the two countries," said former chairman, Rice Exporters Association of Pakistan (REAP), Abdul Rahim Janoo.

The rapid rise in prices forced Colombo to remove import duty on rice to encourage imports and ease the situation particularly when the rice is a staple diet of the Sri Lankan nation.

According to estimates, Sri Lanka would import around 0.5 million tons, but to ease off domestic price it would immediately need 0.225 million tons of rice, exporters said.

Pakistan, expecting bumper baddy crop this season, is in a comfortable position to meet the Sri Lankan demand of Irri-6 rice. The Pakistani Irri-6 is quite popular amongst the Sri Lankan consumers and "hopefully the situation will be fully exploited by our exporters," Abdul Rahim Janoo said.

The Sri Lankan government has removed the import duty up to December 31, 2004, however, extension would depend upon the situation prevalent at that time. The rapidly rising rice prices forced Colombo to take a political decision of removing Rs9 as import duty on rice.

The rice prices there moved up by around Rs10 per kg in a couple of weeks which hit the masses at large, exporter having link with Sri Lanka imports told Dawn. The produce was being sold at around Rs240-25 per kg jumped up to Rs35 per kg in two weeks, they added.

During 1999-2000 there was free trade of rice, and Sri Lankan government did not put any sort of restriction on its imports. However, in 2001, a licensing system was introduced to indirectly discourage import. Then, in 2002, because of bumper crop Colombo initially imposed import duty at Rs7 per kg which was enhanced to Rs9 per kg.

Pakistani rice exporters fully took advantage of free market during 1999-2000 and exported around 110,000 tons of Irri-6 to Sri Lanka. But when licensing system was introduced in the year 2001 only 37,000 tons were exported.

"I am sure our exporters will take advantage and get their due share in Sri Lankan rice market particularly when we can ship any quantity to Colombo within 72 hours and have freight advantage which is only $325 per 20 feet container," Mr Janoo asserted.

He further said that already deals for 15,000 tons have been booked by exporters and its impact on local market was also evident. He said Irri-6 was available at Rs12.40 per kg has now jumped to Rs12.60.

He expressed the hope that greater quantity could be demanded by Colombo because the present buffer stocks of rice have also exhausted and the government would be moving forward to replenish them to meet any situation. Sri Lankan rice, Simba, which was being sold at Rs29.30 per kg, has now soared to Rs44 per kg owing to the shortage of the produce.

Pakistan is expected to have bumper rice crop of 5.8 million tons this season and after meeting domestic demand of around 2.5 million tons an exportable surplus of around 2.7 million tons would be available. Out of this surplus one million tons would be of Basmati and balance of 1.7 million tons of Irri-6.