The Executive has decided to temporarily lift taxes on imported luxury rice. According to officials, local rice production still cannot meet market demand. The 20% customs duty on imported luxury rice was intended to boost food self-sufficiency.
A reversal of course. While the Ministry of Economy and Finance had proposed a 20% customs duty and 5% VAT on imported luxury rice in the supplementary budget law, the executive decided on Wednesday to temporarily suspend these fiscal measures.
Presented by authorities as a means to support food self-sufficiency, the taxation of imported luxury rice now faces the realities of the sector. According to the Ministry of Commerce, "local production cannot yet cover market needs." Analysts question whether this decision was made without considering ground realities and recent shocks affecting the sector since the start of the year.
According to the ministry, "we must close the gap to cover the market, especially with the lean season beginning in a month. This is why this decision was made in the Council of Ministers."
With new fiscal measures implemented in the 2026 supplementary budget law, the government reaffirmed its commitment to reduce fiscal expenditures by 290 billion ariary, in line with International Monetary Fund conditions. The rice import taxation measures were part of provisions to increase tax revenues.
A fragile sector
By suspending taxes on imported luxury rice to preserve purchasing power and rice availability on the market, the State faces a budgetary contradiction: on one hand, it maintains the rice exemption to avoid inflation during the lean season; on the other, this maintenance creates an unexpected revenue shortfall that jeopardizes the objective of recovering or saving the 290 billion ariary required by financial partners.
The rice sector has faced numerous challenges in recent months. Climate variability at the start of the year, particularly cyclones Fytia and Gezani, paralyzed certain producing regions. Rice prices also declined early in the year due to stock accumulation, according to officials. Last year, the country imported over 800,000 tonnes of rice. This year, with the supplementary budget law's corrective measures, policymakers hoped to curb rice imports while ensuring its availability and price stability on the market. However, in the first half of the year, rice imports had already reached 408,667 tonnes, according to the General Customs Directorate.
They represent almost half of last year's imports. The Ministry of Commerce intends to continue regulating imports to avoid excessive rice imports, emphasizes Commerce Minister Haingotiana Andriamadison. Measures taken since March will remain in effect, particularly the prior declaration requirement with the Ministry of Commerce by importers to verify quantities to be imported.
The ministry assures that "the State's general policy aims to progressively reduce import dependency." According to the latest consolidated data, national production is projected at over 5 million tonnes for 2026, exceeding the 4.7 million tonnes of the previous year thanks to agricultural intensification initiatives. Some regions produce paddy in quantity, but local rice must still overcome many constraints before achieving real competitiveness. Poor road infrastructure, speculation, and bidding wars around rice imports weaken local value chains.
Itamara Otton