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India is world’s largest basmati exporter, producing over 70% of global supply and shipping nearly 60 lakh tonnes annually, valued at close to Rs 50,000 cr

Iran has launched retaliation attacks using drones and small-scale missile strikes, targeting several cities across the Middle East, further intensifying regional instability. In response, the Indian Rice Exporters Federation (IREF) on Sunday advised members to avoid entering new ‘cost, insurance and freight’ (CIF) contracts with Iran and Gulf destinations amid escalating West Asia tensions, warning that the situation could disrupt shipments and sharply increase freight and insurance costs. Under CIF arrangements, sellers bear transport, insurance and freight costs until cargo reaches the buyer’s port.

The advisory follows a major US-Israel strike on Iran on February 28, which has raised fears of wider regional conflict and possible shipping restrictions through the strategic Strait of Hormuz in the Persian Gulf. Exporters are concerned that prolonged conflict could block maritime trade routes and trigger financial losses. Punjab and Haryana together contribute nearly 75% of India’s premium aromatic basmati rice exports, with Haryana accounting for about 35% and Punjab about 40%. India is the world’s largest basmati exporter, producing over 70% of global supply and shipping nearly 60 lakh tonnes annually, valued at close to Rs 50,000 crore.

India exported around 60 lakh tonnes of basmati rice in 2024–25, with demand largely driven by West Asia and the Middle East, including Iraq, the UAE and the US. Trade disruptions have already begun as shipping companies reportedly halted vessels in transit, stopping movement of grain cargoes. If the war prolongs, exporters fear mounting losses and falling basmati prices could also hurt farmers growing the premium aromatic variety. Traders also highlighted that shipments heading to Iran or Afghanistan via Iran’s Bandar Abbas port have been delayed, with payment cycles expected to lengthen.

The conflict comes after earlier trade disruptions in January when US sanctions on Iran weakened the Iranian currency, forcing local authorities to restrict food trade and leaving grain stocks worth nearly Rs 2,000 crore stranded. Exporters warn that continued instability could push traders toward financial distress. The Agricultural and Processed Food Products Export Development Authority (APEDA) data showed that basmati exports to Middle Eastern countries between April and December 2025 were worth Rs 27,197 crore, with Iran alone importing premium rice valued at about Rs 6,000 crore during the period.

Industry participants also worry about rising maritime risks due to Houthi threats targeting cargo vessels in the Red Sea. If tensions spread to the Strait of Hormuz, freight and insurance costs could rise sharply, while currency volatility may squeeze export margins. Exporters have been advised to prefer ‘free-on-board’ (FOB) contracts where shipping risks are borne by international buyers. West Asian markets — including Saudi Arabia, Iran, Iraq, UAE and Yemen — account for nearly half of India’s basmati rice exports, making geopolitical stability in the region critical for the trade.

Source : news18