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Informist, Monday, Mar. 2, 2026

 

By Shreya Shetty

 

MUMBAI – India's exports of basmati rice to West Asian countries have been left in limbo after the US and Israel attacked Iran. Previously placed export orders are either stuck at Indian ports or at sea, while new orders have completely halted, analysts and market participants said. Prices are also hit, and are expected to fall further if hostilities in the region persist, they said.

 

"All exports have come to a halt, even though it is the peak time, given the month of Ramadan," said Satish Goel, president, All India Rice Exporters' Association. "Huge shipments in the Mudra port, which are usually on their way to West Asia this time of the year, are currently halted," he said.

 

West Asia is a major destination for Indian basmati rice. In Apr-Jan 2025-26 (Apr-Mar), India exported 5.4 million tonnes of basmati rice, of which 3.6 million tonnes were exported to countries in West Asia, data from the commerce ministry showed. In the region, Saudi Arabia, Iran, Iraq, the United Arab Emirates, Yemen, and Oman are major destinations for Indian basmati rice. 

 

In terms of value, basmati rice exports in the same period were $4.68 billion, which is over 1% of the value of India's total exports at $366.32 billion, data showed. India's current account deficit expanded to $13.2 billion in the quarter ended December from $11.3 billion a year ago, the Reserve Bank of India said Monday. The current account was in a deficit of $14.1 billion in the September quarter.

 

India exported 790,691 tonnes of basmati rice to Iran in Apr-Jan, up over 26% on year, data from the commerce ministry showed.

 

The US and Israel jointly attacked Iran over the weekend, killing Iran's Supreme Leader, Ayatollah Ali Hosseini Khamenei. Iran retaliated on Sunday and launched missiles against Israel and other Gulf countries, killing three US soldiers in Kuwait. Iran also shut the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the Indian Ocean, which is used to transport major commodities such as crude oil and grains.

 

"Ports in Dubai are shut, all major ports in and around Iran are also shutting down, and the Strait of Hormuz is also inaccessible now," said Ranjit Singh Jossan, vice president, The Basmati Rice Millers & Exporters Association, Punjab. "Anyway, no vessel or exporter wants to go to that area," he said.

 

Many exporters have turned their vessels away from the region for safety, parking them at the nearest open ports, Jossan said. "They (exporters) are all offloading their cargoes wherever possible, because going to the exact destination has become tough," he said.

 

The ongoing military conflict hostilities between the US and Israel on one side, and Iran on the other, are also likely to affect India's exports of basmati rice to Europe. "For exports to Europe, the voyage time will be longer because now they will have to go via the Cape of Good Hope in South Africa instead of the Strait of Hormuz," said G. Chandrashekhar, a commodity expert and policy commentator. "This will increase the freight costs, extend the delivery time, and increase the insurance premium, which will weigh on the exporter," he said.

 

The cost of exporting rice—or any other commodity— is also likely to rise due to an increase in crude oil prices, analysts said. "People are assessing the situation, which has also increased crude oil prices, which will ultimately affect freight costs of Indian exports," Chandrashekhar said.

 

To safeguard Indian exporters, the Indian Rice Exporters' Federation has advised its members to avoid entering into fresh 'cost, insurance and freight' commitments contracts to Iran and Gulf destinations, the Press Trust of India reported Sunday.

 

Under such agreements, the seller bears the cost, insurance and freight for cargo transport via waterways until it reaches the buyer's port, the report said. Instead, the federation has advised exporters to conclude sales on 'free-on-board' terms wherever feasible so that freight, insurance, and related risks remain with the international buyer, the federation said, according to the PTI report.

 

"This is the most basic warning any institution could have given, but such moves mean that the buyer bears more costs and risks over the exporter, which dims the appeal of buying the commodity," Chandrashekhar said.

 

With export channels effectively shut, much of India’s basmati rice that would have headed overseas is now piling up at home, a glut that could weigh on domestic prices. India consumes around 25% of the basmati rice it produces, according to the Indian Council of Agricultural Research. The country consumes and exports the same varieties– namely, 121 Basmati and Pusa Basmati.

 

"In the last two days, prices fell by INR 2-INR 3 per kg, because Iran is one of the biggest buyers of Indian basmati rice," said Ashok Jindal, a basmati rice exporter based in New Delhi. Prices of basmati rice are expected to fall further by 10-15% if the military conflict hostilities in West Asia continue in the near term, some market participants said.

 

Others said they cannot quantify the extent of the fall in prices, as it will depend solely on the progression of the situation in West Asia. "Overall, it is not good for trade. Ramadan is also going on currently, so this will harm the peak season of basmati exports," said Rahul Chauhan, president, IGrain, an agri-commodity research centre.

 

"Currently, it is too early to say anything. We are trying to find out how many shipments are stuck and how vast the impact will be on our exports," Goel said, adding, "It is a wait-and-watch situation right now."

 

Monday, prices of the 1401 and 1121 varieties of basmati rice were INR 8,000-INR 8,200 per 100 kg and INR 8,400-INR 8,800 per 100 kg in the Agricultural Produce Market Committee market in Vashi in Navi Mumbai, Maharashtra.

 

Many countries in West Asia had front-loaded basmati rice imports from India in December and January to stock up for Ramadan. As such, these countries do not have "an urgent need" to purchase the grain, and could make do with a stall in supply in the near term, analysts said. 

 

"However, they will need to replenish at some point, and demand from those countries could rise in the second half of March, and by then, hopefully, the conflict will go down," Chandrashekhar said. 

 

Most market participants are hoping for a swift de-escalation of the armed conflict in West Asia. "This is a big setback for the Indian basmati rice industry, especially if this conflict continues. Markets will crash if this goes on longer", Jossan said.  End

 

Edited by Deepshikha Bhardwaj

 

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