India's rice exports face threats due to West Asia tensions, affecting basmati trade with delays and rising costs, particularly impacting Punjab and Haryana.
Rice exports from India are under threat amid escalating military tensions in West Asia, with exporters flagging concerns about payment delays and shipping disruptions to Iran, Afghanistan and several other Gulf countries.
The exposure is especially high for basmati rice, as nearly 50% of India’s exports go to five West Asian countries –– Saudi Arabia, Iran, Iraq, the UAE and Yemen, making the trade vulnerable to prolonged instability.
In the aftermath of the United States and Israel launching an attack on Iran on Saturday, triggering fears of wider regional instability and possible restrictions on shipping through the Strait of Hormuz, the Indian Rice Exporters Federation (IREF) on Sunday advised its members to avoid entering into new ‘cost, insurance and freight’ (CIF) commitments to Iran and Gulf destinations. Under CIF agreements, sellers bear the costs, insurance and freight for cargo transported via waterways until it reaches the buyer’s port.
The federation advised exporters to instead conclude sales on ‘free-on-board’ (FOB) terms wherever feasible, so that freight, insurance and related risks remain with international buyers.
It warned that developments in Iran and the United Arab Emirates could immediately impact bunker fuel prices and disrupt the availability of container and bulk vessels. “In such circumstances, container and bulk freight could increase sharply at short notice, exposing exporters to losses on fixed delivered-price contracts,” the federation said.
It also cautioned that insurance premiums could rise steeply if the geopolitical situation worsens and urged exporters to exercise restraint while concluding new orders and avoid open-ended, unhedged positions.
Basmati rice is the most vulnerable segment, with India being the world’s leading exporter of the cereal grain, commanding over 70% of global production, according toAPEDA data.
India exported around six million tonnes of basmati rice, worth nearly ₹50,000 crore, in 2024-2025, with demand primarily driven by West Asian countries,APEDA said.
With basmati wholesale prices already rising by 10-15% over the past month and Iran being a key market, the federation said that it heightened volatility in prices in the coming days.
Punjab and Haryana are among the states to be hit the hardest, with the two states contributing nearly 75% of the total premium aromatic basmati grain exports. While Haryana’s share roughly stands at 35%, Punjab accounts for 40% of the exports, according togovernment estimates.
“The war has led the shipping companies to halt their cargo vessels where they are, and the movement of material and grain loaded in these vessels has also been stopped,” said Ranjit Singh Jossan, vice president of basmati exporters association in Punjab. He believes that if the conflict stretches, the losses for the exporters will mount and will cause a fall in basmati prices, impacting the growers of the aromatic grain.
“Some impact of the conflict on the trade has already started, “ Sushil Kumar Jain, Rice Exporters Association’s Haryana unit president, said.
The shipments which were headed to Iran or even to Afghanistan via Iran’s biggest port, Bandar Abbas, have been held up. “These shipments will remain stuck till the situation improves, and it will impact the market. Payments may also get delayed,” Jain said.
As per data from the government’s Agricultural and Processed Food Products Export Development Agency (APEDA), basmati exports to West Asian countries between April-December 2025 were ₹27,197 crore. Iran alone imported premium grain worth ₹6,000 crore.
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