Amid disruptions to India’s basmati rice exports due to the West Asia war, the ports, shipping and waterways ministry will soon meet major shipping lines to address rising freight rates, container shortages, and supply chain bottlenecks.
According to exporters, freight rates have surged as the West Asia conflict chokes key shipping routes, reflecting growing disruptions across global logistics chains.
Exports to West Asia have already come to a halt due to the ongoing war, and the rising freight cost is acting as a stumbling block in exporting to other nations.
"We had a meeting with officials of DGFT (Directorate General of Foreign Trade), commerce ministry, Export Credit Guarantee Corporation of India, and Ministry of Ports, Shipping and Waterways and highlighted the plight of basmati rice exporters,” said Ajay Bhalothia, general secretary, All India Rice Exporters Association (AIREA).
“We were assured by government stakeholders that the Ministry of Shipping would shortly meet major shipping line operators to address the escalating logistical challenges including high freight rates," Bhalothia added.
Exports to Gulf hit
Shipping disruptions, along with rising freight and insurance costs, are posing a significant threat to India’s nearly $6 billion basmati rice trade. The concern comes amid mounting uncertainty over consignments headed to the Gulf region, which accounts for about 60–70% of India’s total basmati exports.
Another exporter, who was also in the meeting, confirmed the development. “Rising freight costs have been a cause of concern for exporters. It was discussed in the meeting and we have been assured of government intervention,” said Satish Goel, president, AIREA.
"The freight cost has risen like anything since the start of the war. For instance, freight rates for 20-TEU (twenty-foot equivalent unit) containers bound for London have jumped sharply from $800 to $2,000 per container, making exports unviable,” said Bhalothia.
TEU, or twenty-foot equivalent unit, represents the capacity of a standard 20-foot shipping container.
Exporters said that the continued rise in shipping costs could have a cascading impact on global trade, potentially increasing import bills and adding to inflationary pressures across economies.
Shipments worth ₹4,000 crore are currently stuck - either lying at Indian ports or destination ports.
Queries sent to the ministries of commerce and shipping, and Export Credit Guarantee Corporation remained unanswered till press time. Also, shipping lines declined to comment.
During the meeting, the government outlined measures to support traders amid ongoing challenges.
It said that the ECGC has assured that all claims under the multi buyer open policy will be settled within 30 days of filing, helping ease liquidity concerns for exporters. The government also noted that additional costs such as higher ocean freight, detention, and demurrage charges will be covered under claims, offering further relief.
Under the multi buyer open policy, the ECGC offers export credit insurance to protect against the risk of non-payment by multiple buyers.
The rice exporters also noted that ECGC has confirmed that premium rates will remain unchanged, shielding exporters from any additional financial burden at a time of rising costs.
“We also urged the government to extend RoDTEP, which is set to expire on 31 March, for the next fiscal year,” Goel said.
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, introduced on 1 January 2021, provides refunds of various central, state, and local taxes and duties—such as VAT on fuel, electricity duty, and mandi tax—incurred on inputs used in the production of exported goods that are not covered under any other refund mechanism.
Experts also emphasised the need for timely government intervention to ensure the smooth flow of exports.
“A meeting with shipping lines would be a much-needed step by the government to ease logistical pressures and stabilise supply chains. Such measures are crucial, as disruptions in exports are ultimately affecting farmers’ ability to realise the benefits of overseas demand, whether in crops like rice or wheat, thereby impacting their incomes,” Binod Anand, agriculture expert and member of the government’s committee on minimum support price (MSP), which guarantees farmers a floor price for their crops.