US tariff to slow basmati rice exports, create local surplus
The US has imposed a 50% import tariff on Indian aromatic rice, affecting about 0.3 MT of exports, while Pakistan faces only a 19% levy. Exporters fear price pressure with 0.5 MT carryover stock, though strong demand from Middle East, Europe, and Asia is expected to offset the US market impact.
With the US imposing tariffs, about 0.3 million tonne (MT) of India’s annual aromatic rice exports would be hit. Exporters fear that the levy would make Indian rice unremunerative against competitor Pakistan’s.
The US has imposed only a 19% additional import tariff on Pakistan while India now faces 50% extra levy.
Domestic surplus and price pressure
Exporters said that tariff imposition coming just before the harvesting of paddy to commence and carry forward stock of 0.5 MT of aromatic rice from last year would create excess supplies and pull down the domestic prices.
“Pakistan, our competitors, stands to gain if this duty is being imposed exclusively on India,” Ranjit Singh Josan, vice-president, basmati rice millers and exporters association of Punjab, told FE. Josan said the consumers will have to pay an additional $ 240/tonne over the basmati rice shipped at around $ 1200 tonne to the US.
Wider demand cushions impact
“Demand for basmati remains robust in our core markets across the Middle East, Europe, and Asia, which collectively drive the bulk of global consumption. The US market will remain relevant, but not to an extent where such policy measures alter the overall trajectory of the industry.” Akshay Gupta, business head for bulk exports, KRBL, which ships basmati rice to over 90 countries under ‘India Gate’ brand, told FE.
Stating that the US market accounts for only about 4–5% of global trade, Gupta said ,”even with the recently announced 50% tariff, we do not foresee a material impact on the wider market. Basmati is a staple for South Asian communities in the US, and consumption is unlikely to stop altogether,”.
India exported around 0.27 MT of basmati rice to the US valued at $ 300 million in FY25. The total annual exports of basmati rice is over 6 MT and in FY25 basmati rice worth a record $ 5.94 billion was shipped.
Saudi Arabia, Iran and the United Arab Emirates are key export destinations for the basmati rice.
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 35% to 40% in rice trade.
India has removed all the restrictions imposed on rice shipment last year.
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Source : Financial Express
