India’s basmati exports are expected to be steady and likely to witness a growth of over 2% year-on-year in FY26 to 6.06 million tonne (MT) despite being impacted by the West Asia conflict, Crisil ratings said in a report on Monday.
While exports of aromatic and long-grain rice to Iran, one of the biggest destinations for basmati, are likely to be affected, higher demand from other markets in the region, such as Saudi Arabia, Iraq, the United Arab Emirates and Yemen will provide an offset, the report noted.
It stated that if logistical challenges persist for a month, basmati rice trade volume might be impacted by 0.35-0.37 MT.
“However, demand from other import-dependent countries in the region where basmati rice is a staple, to maintain food security, will help offset this impact,” according to the Crisil report.
What do researchers say?
“Disruptions in the Strait of Hormuz, which is a critical transit route for rice exports to West Asia, could lead to blockage of goods and delayed payments from customers in the near term,” Nitin Kansal, director, Crisil Ratings, said. Basmati rice exporters are also exploring alternative routes to avoid the Strait of Hormuz to ensure supply to the region, the agency has stated.
India’s exported basmati rice valued at $5.94 billion in FY25. Saudi Arabia (20.25%), Iraq (14.3%), Iran (12.67%), the United Arab Emirates (6.13%) and Yemen (6.03%) had a major share in the shipment last fiscal. “The working capital cycle of basmati rice exporters is likely to stretch due to logistical hurdles such as inadequate availability of ships, longer transit times and payment-related challenges, resulting in a rise in working capital debt,” the report noted.
Exporters likely to pass increased costs to customers
The exporters are, however, likely to pass on any increase in freight and insurance cost to customers, which will help protect their operating profitability, it observed. India is the largest producer and exporter of basmati rice, with a global market share of 85%, while Pakistan holds the rest of the export market for the aromatic rice.
The share of exports constitute nearly two-third of India’s basmati rice sales by volume annually, making the industry highly vulnerable to geopolitics.India has been the biggest rice – basmati and non-basmati – exporter in the world in the last decade and it has a market share of around 45% in rice trade.
India exports both aromatic and long grain basmati and non-basmati varieties to over 140 countries, across Asia, the middle east, Europe, and the U S. In several countries it faces competition from rice exporting countries including Pakistan and Thailand.