More Stories

Informist, Thursday, Apr. 3, 2025

 

By J. Navya Sruthi

 

MUMBAI – Market participants and analysts say recriprocal tariffs on Indian exports to the US imposed by President Donald Trump Thursday may slow down the country's rice exports in the short term. But, they add, the unique quality of India's rice would help to sustain demand from US consumers.  

 

Trump on Thursday announced 27% tariffs on imports from India. Opting for a discounted reciprocal approach, Trump said his administration would charge half the tariffs imposed by a country on US imports. 

 

"We can see some fluctuations (in prices) in the short term, but I think in 2-3 months, things will be clear and set up," said Vijay Setia, foremer president of All India Rice Exporters' Association. "I think there would not be panic for the rice industry at all." 

 

India exports most rice to West Asia and shipments to the US are not as high. Data from the commerce ministry showed that in 2023-24 (Apr-Mar) India had exported 234,469 tonnes of basmati rice to the US, while the country's total shipments were at 5.24 million tonnes. During Apr-Nov in FY25, India exported 204,167 tonnes to US while the total exports were at 4.2 million tonnes.  

 

HIGHER TARIFFS ON COMPETITORS

The US has imposed 27% tariffs on Indian exports to the US, which is lower than those on other southeast Asian countries. Apart from India, Trump also slapped 34% tariff on China, 46% on Vietnam, 30% on Pakistan, and 37% on Thailand.  

 

Thailand and Vietnam are major exporters of the non-basmati white rice and broken rice. When the Indian government had banned the exports of non-basmati white rice in July 2023, these countries were catering to most of the global demand. Similarly, demand for Pakistan's basmati rice variety also increased when the Indian government imposed a minimum export price of $1,200 per tonne in August 2023, later reduced to $950 in October 2023. Now, with no curbs on Indian rice exports, high tariffs on these countries would aid the country's exports to the US. 

 

"While this (tariffs) may slow shipments in the short term, India's competitive advantage remains intact, as Vietnamese and Thai rice face even higher US tariffs of 46% and 36%, respectively," said Indrajit Paul, head of research, Agrocorp International.

 

US IMPORTERS

India being a net exporter, analysts and market participants say the US importers would be affected because of the 27% tariffs. "These duties will impact importers in America first, as their import cost increases by 27%," Setia said. "Then there is a possibility that the importers there for some time, to recalibrate their wealth assessment cash flow, may slow down their imports because of duty."

 

US importers may potentially prompt some consumers to shift towards domestically grown rice due to increasing costs, Paul said. But Kedia said there will not be any immediate shift of demand from Indian rice to US rice in the local markets of the US. "Though, this is one of the reasons why they have put tariffs, this is not a thing that will work by pressing a button all of a sudden," said Ajay Kedia, director at Kedia Advisory. 

 

But in the long-term Paul said Indian rice is expected to regain its position in the US market due to its unique quality, particularly basmati rice. This may help sustain demand despite price pressures, he added.  End

 

US$1 = INR 85.43

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

With inputs from Anjali Lavania
Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.