Shares of Indian firms that export rice and tea to the Middle East slumped amid concerns that geopolitical tensions may create logistical headwinds and add cost burden.
Investors worry that Iran’s attack on Israel would lead to supply chain disruptions and raise delivery and reinsurance costs for producers in the South Asian country. Iran is a major buyer of India’s basmati rice.
Rice producers Kohinoor Foods Ltd. and Chaman Lal Setia Exports Ltd. fell as much as 8.3% and 13%, respectively, before paring the declines. Tea manufacturers including Jayshree Tea & Industries Ltd. and Goodricke Group Ltd. also dropped.
Read: Israel Versus Iran — What All-Out War Could Look Like: QuickTake
India’s export of basmati rice rose 35% for 2022-23 compared to the previous period, according to government data. Saudi Arabia is the leading destination for the product, followed by Iraq and Iran.
“Higher costs and delay in orders are the biggest worries for these companies now,” said Ambareesh baliga, an independent market analyst. “The whole delivery chain to the Middle East could be affected” if the conflict grows wider, he added.
Most Read from Bloomberg Businessweek
© Copyright 2023 The SSResource Media.
All rights reserved.