Shares of rice exporters weakened after the government banned broken rice and some varieties from shipping overseas.
Shares of LT Foods dropped over 3.4 percent, Chaman Lal Setia Exports lost 3 percent, Kohinoor Foods Ltd 2 percent and KRBL Ltd erased 1 percent.
Analysts said this will make Indian rice expensive for overseas buyers and bring down exports, effectively it will hit export business of these companies.
Read: Top rice exporter India curbs sales amid global inflation
The government on Thursday prohibited exports of broken rice and imposed a 20 percent levy on shipments of unmilled and husked brown varieties, according to release.
"While monsoon means reverting to normal levels, an increase in sowing activity has improved the outlook for agriculture production. Still, to manage latent price pressures the government has introduced export duties on rice," said Rahul Bajoria, MD and Chief India Economist at Barclays.
"We expect the rice production to remain lower than last year’s level, which would break a six-year trend of continuous increases in paddy output," Bajoria said.
The move by India, which accounts for 40 percent of the global rice trade, will put further pressure on countries that are struggling with worsening hunger and soaring food inflation. Rice is a staple food for about half of the world’s population, with Asia producing and consuming about 90 percent of global supply.
India has curbed wheat and sugar exports, adding to a spate of food protectionism that’s exacerbated chaos in global food markets brought on by the war in Ukraine.
With inputs from Bloomberg
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