India’s basmati rice exports are facing significant uncertainty as escalating tensions in West Asia disrupt shipping routes, delay payments, and increase freight and insurance costs.
Exporters have raised concerns over trade with Iran, Afghanistan, and key Gulf markets following recent military escalation in the region and fears of potential restrictions in the Strait of Hormuz — a critical global shipping corridor.
Nearly 50% of India’s basmati exports are destined for five West Asian countries: Saudi Arabia, Iran, Iraq, United Arab Emirates, and Yemen, making the sector highly vulnerable to prolonged instability.
Exporters Advised to Avoid High-Risk Shipping Terms
The Indian Rice Exporters Federation (IREF) has advised members to avoid entering new ‘cost, insurance and freight’ (CIF) contracts with buyers in Iran and Gulf nations.
Under CIF agreements, exporters bear freight and insurance costs until goods reach the destination port — exposing them to sharp increases in shipping and fuel prices during geopolitical crises.
Instead, the federation has recommended shifting to ‘free-on-board’ (FOB) contracts wherever possible, transferring freight and insurance responsibilities to international buyers.
The advisory also warned that developments in Iran and the UAE could immediately affect bunker fuel prices and vessel availability, potentially triggering sudden spikes in container and bulk freight rates.
Insurance Costs and Payment Delays Loom
Export bodies cautioned that insurance premiums may rise sharply if hostilities escalate further. Exporters have been urged to avoid open-ended or unhedged positions amid heightened volatility.
Shipments routed through Iran’s largest port, Bandar Abbas, particularly those headed to Afghanistan, have reportedly been held up. Industry representatives fear delays in cargo movement and payments if tensions persist.
Iran alone accounts for approximately ₹6,000 crore worth of India’s basmati exports, making it one of the largest individual markets for the premium grain.
₹50,000 Crore Export Industry Under Pressure
According to data from the Agricultural and Processed Food Products Export Development Authority (APEDA), India exported nearly six million tonnes of basmati rice worth close to ₹50,000 crore in 2024–25.
Between April and December 2025 alone, exports to West Asian countries stood at ₹27,197 crore.
India remains the world’s leading basmati exporter, commanding over 70% of global production. However, wholesale basmati prices have already risen by 10–15% in the past month, and continued instability could increase volatility further.
Punjab and Haryana Farmers Face Potential Impact
The impact is expected to be most severe in Punjab and Haryana, which together account for nearly 75% of India’s premium basmati exports. Punjab contributes around 40%, while Haryana accounts for approximately 35%, according to government estimates.
Industry representatives warn that if shipping disruptions continue, exporters may incur mounting losses, which could eventually depress farmgate prices and affect growers of aromatic basmati varieties.
Market Outlook: Caution Amid Uncertainty
Exporters report that some impact on trade has already begun, with shipping companies halting cargo movements and vessels awaiting clarity. If the geopolitical situation stabilises soon, the trade may recover quickly. However, a prolonged conflict could strain supply chains, disrupt payments, and dent farmer incomes.
Stakeholders across the supply chain — from exporters to farmers — are closely monitoring developments as India navigates both diplomatic and economic challenges arising from the Middle East crisis.
