Rice trade said to be affected by Red Sea crisis, says minister Goyal

New Delhi: The crisis in the Red Sea is said to have impacted rice trade, but clarity will emerge only next month, Union commerce minister Piyush Goyal has said.

India is a leading exporter of basmati rice, with over 4 million tonne shipped out of the country annually. India has plans to export 500,000 tonne of new season basmati rice to Europe and the Middle East with contracts already signed.

Mint on 24 December reported that basmati rice export may be affected due to trade route disruptions in the Red Sea region and prices of the food grain are likely to increase due to rising logistics costs, given logistics firms were forced to suspend operations, and opt for longer routes to reach destinations in Europe and Middle East.

Crisis emerged after Yemen’s Houthi group launched attacks using drones and missiles on commercial ships at the southern end of the Red Sea. The Middle East is one of the largest export markets for basmati rice.

“Red sea disruptions is a matter of fact. As of now, no immediate effect is reported. When the current month's data comes in next month, then it will become clear about any significant effect," Goyal said.

“The one industry which got affected, as I'm told, is rice exports. But more details will be known once we get December (trade) figures,” the minister said at an event held to launch the e-commerce exports handbook for Micro Small and Medium Enterprises (MSME) on Thursday.

The disruptions in shipping operations in the Red Sea, accounting for a chunk of global container traffic, has led to a rise in logistic costs for commodities transported through the route, which include rice, oil, and manufactured goods.

After a ban on non-basmati white rice exports in June to stabilize domestic prices, India set a floor price, or minimum export price of $1,200 a tonne for overseas sales of basmati in August. This floor price was reduced to $950 per tonne in October. 

According to commerce ministry’s data, rice exports declined from $6.98 billion a year ago to $6.45 billion in April-November 2023.