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Informist, Monday, Mar. 16, 2026

 

NEW DELHI – India's basmati rice exports are expected to remain broadly steady in the financial year ending Mar. 31 and the one starting Apr. 1, with growth of up to 2% from the 6.06 million tonnes exported in the financial year 2024-25 (Apr-Mar), despite disruptions caused by the military conflict in West Asia, according to a report by Crisil Ratings.

 

Exports to Iran, a key destination for Indian basmati rice, may decline because of supply chain disruptions linked to the conflict. However, stronger demand from other West Asian markets such as Saudi Arabia, Iraq, the United Arab Emirates, and Yemen is expected to offset the impact, according to the report.

 

Crisil Ratings said disruptions in the Strait of Hormuz, a key transit route for shipments to West Asia, could affect trade flows in the near term by delaying cargo and payments from buyers. If logistical challenges persist for about a month, basmati rice trade volumes could fall by around 350,000–370,000 tonnes.

 

However, demand from other import-dependent countries in the region is expected to remain firm to ensure food security. Crisil Ratings estimates demand from Saudi Arabia, Iraq, the UAE, and Yemen to rise by 5–6%, helping to sustain overall export volume.

 

"Disruptions in the Strait of Hormuz could lead to blockage of goods and delayed payments from customers in the near term," Nitin Kansal, director at Crisil Ratings, said. "Nevertheless, Indian basmati rice export volume is likely to remain resilient due to higher demand from other Middle Eastern countries."

 

India accounts for nearly 85% of the global basmati rice trade, and exports make up about two-thirds of the country's total basmati rice sales by volume, making the industry highly vulnerable to geopolitical developments. Iran alone accounted for about 14% of India's basmati rice export volume in FY25 and West Asia as a whole accounted for around 70–72%, as per the report.

 

While export volumes are expected to remain stable, the working capital cycle of basmati rice exporters may lengthen due to logistical hurdles such as limited availability of ships, longer transit times, and payment delays. Exporters are also exploring alternative routes to bypass the Strait of Hormuz, which could also increase transit times.

 

This could raise working capital requirements by 10–15%, prompting exporters to take on additional debt, Crisil Ratings said. However, companies are likely to pass on the higher freight and insurance costs to customers, helping to protect their operating profitability.

 

"Alternative routes may lead to an increase in transit times, which could lengthen the working capital cycle of exporters. However, healthy balance sheets of rated companies will keep their credit profiles stable," Smriti Singh, associate director at Crisil Ratings, said.

 

Crisil Ratings expects gearing for its rated basmati rice exporters at around 0.8–0.9 times in FY27, compared with an average of around 0.83 times over the past three financial years. Interest coverage is seen moderating to around 3.5 times from an average of about 4.6 times during the same period.

 

Realisation from basmati rice exports is expected to remain steady in FY27 as demand remains resilient and production of basmati paddy in key growing areas is likely to remain largely unchanged following excess rainfall. Geopolitical risks affecting export demand and exporters' working capital cycles will remain key factors to watch, Crisil Ratings said.  End

 

Reported by Pallavi Singhal

Edited by Rajeev Pai

 

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