New Delhi: Basmati rice exporters will meet officials of the Agricultural and Processed Food Products Export Development Authority (Apeda) this week to assess the fallout of escalating tensions in West Asia, as shipping disruptions and rising freight and insurance costs threaten India’s nearly $6 billion basmati trade in FY25, as per people in the know.
The move comes amid growing uncertainty over consignments bound for the Gulf region, which accounts for nearly 60-70% of India’s basmati exports. Exporters said that while the immediate damage is still being assessed, several shipments are either stuck in transit or held up at ports, raising concerns over delayed payments and contractual risks if the conflict is prolonged.
“Exports have come to a standstill in some corridors. Even the Afghanistan market is affected, with consignments currently in standstill mode,” said Pankaj Goel, vice president of All India Rice Exporters Association (Airea). He added that Iranian importers had placed large orders in the two months preceding the outbreak of hostilities, increasing exposure for Indian exporters.
Satish Goel, Airea president, said that the organization is assessing the impact as some consignments were in transit while others were stuck at select ports. “We are meeting commerce ministry officials handling agricultural exports to safeguard our shipments,” he said.
Apeda, the nodal export promotion body under the commerce ministry, is expected to review the situation and explore possible support measures, including trade facilitation and risk mitigation, as per people aware of the matter.
- Nearly 60-70% of India's basmati exports are concentrated in West Asia, making the $6 billion trade uniquely vulnerable to regional conflict.
- Exporters are reporting a standstill in key corridors, with fears of a repeat of the 2023 Red Sea crisis that could force longer, costlier shipping routes.
- Rising war-risk premiums and bunker fuel costs are forcing exporters to abandon CIF contracts to protect margins.
- Geopolitical tension is likely to spill over into the edible oil sector, potentially raising domestic prices for sunflower and soybean oil.
- Any prolonged disruption will hit the income of rice farmers in Punjab, Haryana, and Western UP during the peak FY25 export window.
Important export market
West Asia remains the backbone of India’s basmati trade, with Saudi Arabia, Iran, Iraq, the United Arab Emirates and Yemen among the largest buyers. According to the commerce ministry data, in value terms, exports to Saudi Arabia were about $1.20 billion, followed by Iraq at roughly $0.85 billion and Iran at around $0.75 billion. Shipments to the United Arab Emirates were valued at $0.36 billion, while exports to Yemen were close to $0.36 billion, underlining the region’s central role in sustaining India’s basmati rice trade.
Together, these five West Asian markets accounted for 58.8%, or $3.53 billion, of India’s $6 billion in basmati exports in FY25, underscoring the trade’s high exposure to regional disruptions.
According to industry leaders, even Afghanistan, which had recently reopened to Indian basmati, has seen shipments stall amid the escalation.
A query sent to Apeda chairman Abhishek Dev on Monday remained unanswered till press time.
Beyond shipment delays, exporters are wary of rising bunker fuel costs and vessel availability constraints if crude prices spike. Freight rates could rise sharply at short notice, while marine war-risk premiums are also expected to increase. Industry representatives said they are avoiding fresh cost, insurance and freight (CIF) contracts and are reviewing shipment terms to limit exposure.
The situation echoes the Red Sea crisis of late 2023, when attacks on commercial vessels forced vessels to reroute through the Cape of Good Hope, lengthening transit times and inflating logistics costs. Exporters fear a repeat of the scenario could squeeze margins, particularly on fixed-price contracts, and strain working capital as payments are delayed.
“With nearly two-thirds of India’s basmati shipments linked to the Gulf, any prolonged disruption could ripple across the value chain, from millers and traders to farmers in key producing states such as Haryana, Punjab and western Uttar Pradesh,” said Binod Anand, an agri expert.
Cause of concern for edible oil prices
Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association (IVPA), said that any escalation between the US and Iran would have a direct ripple effect on India’s crude and edible oil markets.
“Rising crude oil prices not only increase logistics costs, but the linkage between edible oils and the global biofuel market could also have an inflationary impact on international prices and raise insurance risks for vessels,” he said.
Given India’s heavy dependence on imported edible oils, any global supply chain disruption would inevitably feed into domestic prices. Desai added that in terms of supply chains, sunflower and soybean oil could face disruptions if shipping routes around the Red Sea or the straits are affected, particularly for cargo originating from the Black Sea region.
“In the near term, we expect volatility to persist in edible oil prices as well as in the dollar–rupee exchange rate, with markets closely tracking geopolitical developments,” he said.
The Apeda is a statutory body under the ministry of commerce and industry, set up to promote and develop exports of agricultural and processed food products. It plays a key role in market development, export promotion, quality certification and addressing trade-related issues faced by exporters. Apeda also coordinates with exporters and government departments to facilitate shipments, resolve market access concerns and implement policy support measures during periods of trade disruption.