India’s basmati rice exports threatened by Middle East tensions

India’s rice exports are facing uncertainty as escalating military tensions in West Asia disrupt shipping and payments to key markets, including Iran, Afghanistan, and other Gulf countries. Exporters have raised concerns about delayed payments and stalled shipments, particularly for basmati rice, which accounts for nearly half of India’s exports to five West Asian nations — Saudi Arabia, Iran, Iraq, the UAE, and Yemen.

Following the US-Israel strike on Iran on Saturday, fears of wider regional instability and potential restrictions on shipping through the Strait of Hormuz have intensified. The Indian Rice Exporters Federation (IREF) advised members to avoid entering new ‘cost, insurance, and freight’ (CIF) contracts for Iran and Gulf destinations and instead use ‘free-on-board’ (FOB) terms to shift shipping and insurance risks to buyers.

Exporters Warn of Rising Costs and Delays

The federation highlighted that developments in Iran and the UAE could immediately drive up bunker fuel prices and disrupt container and bulk vessel availability. Insurance premiums could also rise sharply if tensions worsen, exposing exporters to losses on fixed-price contracts. “Some impact of the conflict on the trade has already started,” said Sushil Kumar Jain, president of the Rice Exporters Association’s Haryana unit. Shipments to Iran and Afghanistan via Bandar Abbas port have already been held up, delaying deliveries and payments.

Basmati Market Faces Volatility

Basmati rice, where India commands over 70% of global production, is the most vulnerable segment. In 2024-25, India exported around six million tonnes of basmati rice, worth nearly Rs 50,000 crore, with West Asia driving demand, according to APEDA. Punjab and Haryana, contributing roughly 75% of premium basmati exports, are expected to be hit hardest. Ranjit Singh Jossan, vice president of the Basmati Exporters Association in Punjab, warned that prolonged conflict could reduce prices and directly affect growers. Between April and December 2025, basmati exports to West Asia were Rs 27,197 crore, with Iran alone importing premium grain worth Rs 6,000 crore.