Middle East Unrest Puts Pressure on India’s Basmati Rice Trade
02 March 2026, New Delhi: Rising geopolitical tensions in the Middle East have triggered fresh concerns for India’s rice exporters, particularly in the premium basmati segment, which relies heavily on markets such as Iran, Saudi Arabia, Iraq, the UAE and Yemen. With shipping routes through the Strait of Hormuz facing potential disruption and oil prices showing volatility, trade stakeholders fear increased freight costs, insurance premiums and contractual risks in the coming weeks.
In this backdrop, the Indian Rice Exporters Federation (IREF) has issued a formal advisory to its members following the deteriorating geopolitical situation in the Islamic Republic of Iran and parts of the Gulf region, amid reports that movements through the Strait of Hormuz could face restrictions.
In its communication dated March 1, 2026, IREF has advised exporters not to undertake new CIF (Cost, Insurance and Freight) commitments for affected destinations. Instead, wherever feasible, exporters have been urged to conclude sales on FOB (Free on Board) terms, ensuring that freight, insurance and related logistical risks remain with the international buyer.
The Federation cautioned that developments in Iran and the United Arab Emirates could immediately impact bunker (ship fuel) prices. A spike in oil prices may also disrupt container and bulk vessel availability, leading to sharp increases in freight rates at short notice. Such volatility, IREF warned, could expose exporters to significant losses on fixed delivered-price contracts. Additionally, marine insurance premiums may rise steeply under heightened risk conditions.
Exporters have further been advised to exercise restraint while concluding new orders and to avoid open-ended, unhedged positions until clarity emerges.
India’s Rice Trade Exposure: Middle East & Africa Account for ~50% of Exports
India’s rice trade with Africa and the Middle East together accounts for roughly half of national rice exports. During April–December 2025 (FY 2025–26), exports to the Middle East totalled 3.90 million MT, while exports to Africa reached 7.16 million MT, underscoring the scale of exposure.
Basmati Exports (Apr–Dec 2025)
| Region | Qty (MT) | Amt (INR Cr) | Avg Rate (INR/MT) | USD (M) | Avg Rate (USD/MT) |
|---|---|---|---|---|---|
| Middle East | 32,05,925.00 | 23,771.39 | 74,148.29 | 2,724.81 | 849.93 |
| Africa | 3,21,324.00 | 2,375.35 | 73,923.87 | 271.22 | 844.07 |
The Middle East remains the dominant market for basmati rice, both in volume and value terms, with average realizations significantly higher than non-basmati shipments.
Non-Basmati Exports (Apr–Dec 2025)
| Region | Qty (MT) | Amt (INR Cr) | Avg Rate (INR/MT) | USD (M) | Avg Rate (USD/MT) |
|---|---|---|---|---|---|
| Middle East | 6,94,740.00 | 3,425.38 | 49,304.49 | 391.18 | 563.06 |
| Africa | 68,34,005.00 | 22,490.63 | 32,909.88 | 2,575.56 | 376.87 |
Africa emerges as the principal destination for non-basmati rice, accounting for the bulk of shipments at relatively lower average prices compared to the Middle East.
Grand Total Rice Exports (Apr–Dec 2025)
| Region | Qty (MT) | Amt (INR Cr) | Avg Rate (INR/MT) | USD (M) | Avg Rate (USD/MT) |
|---|---|---|---|---|---|
| Middle East | 39,00,665.00 | 27,196.77 | 69,723.41 | 3,115.99 | 798.84 |
| Africa | 71,55,329.00 | 24,865.98 | 34,751.69 | 2,846.78 | 397.85 |
The data highlights that while Africa leads in volume terms overall, the Middle East contributes significantly to export earnings due to higher average unit values, particularly in basmati rice.
Top 5 Basmati Destinations Concentrated in Middle East
IREF noted that the five leading basmati destinations are all located in the Middle East viz. Saudi Arabia, Iran, Iraq, UAE and Yemen and together account for approximately 50% of India’s total basmati exports, making the current situation especially sensitive for the premium rice segment.
Table 2A: Top 5 Basmati Destinations (Apr–Dec 2025)
| Country | Qty (MT) | Amt (INR Cr) | Avg Rate (INR/MT) | USD (M) | Avg Rate (USD/MT) |
|---|---|---|---|---|---|
| Saudi Arabia | 7,66,382.00 | 5,992.30 | 78,189.45 | 687.26 | 896.75 |
| Iran | 6,81,436.00 | 4,639.17 | 68,079.38 | 533.51 | 782.92 |
| Iraq | 5,69,374.00 | 4,147.92 | 72,850.62 | 476.15 | 836.26 |
| UAE | 3,18,655.00 | 2,406.34 | 75,515.37 | 274.85 | 862.52 |
| Yemen | 3,00,032.00 | 2,153.46 | 71,774.28 | 245.43 | 818.00 |
Given Iran’s prominent position as a key basmati buyer and the prevailing geopolitical tensions, the Federation expects heightened volatility in basmati wholesale prices in the coming days. Wholesale basmati prices have already risen by 10–15% over the past month, adding to market uncertainty.
Federation Monitoring Situation Closely
IREF stated that it is closely monitoring developments and remains in touch with exporters whose consignments are currently in transit or awaiting clearance at destination ports. Members facing logistical, contractual or payment-related challenges have been encouraged to seek the Federation’s assistance.
The Federation indicated that further advisories will be issued as the situation evolves, particularly if shipping disruptions, oil price volatility or insurance risks intensify.
For India’s rice exporters, especially in the basmati segment, the coming weeks may test risk management strategies, contract structuring and freight planning as geopolitical developments unfold in one of the country’s most critical export corridors.
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