• Freight, insurance and payment risks rise as Strait of Hormuz concerns disrupt trade flows
• Exporters shift to FOB contracts; Punjab and Haryana supply chain exposed

India’s basmati rice trade is facing renewed uncertainty as escalating tensions in West Asia disrupt logistics, inflate freight and insurance costs, and threaten payments from key buyers.

Nearly half of India’s basmati shipments are destined for Saudi Arabia, Iran, Iraq, the United Arab Emirates and Yemen. Any restriction around the Strait of Hormuz, a critical maritime corridor, could tighten vessel availability and push up bunker fuel and container freight rates, exporters say.

Contracting strategy shifts amid volatility

The Indian Rice Exporters Federation has advised members to avoid fresh cost, insurance and freight (CIF) contracts for Iran and Gulf markets. Under CIF terms, exporters bear ocean freight and marine insurance until discharge, leaving them exposed to rate spikes during geopolitical disruptions. The federation has recommended free-on-board (FOB) contracts, shifting freight risk to buyers.

Insurance premiums for cargoes bound for high-risk zones are expected to rise if hostilities escalate, while unhedged positions could widen losses.

Iran trade and supply chain exposure

Iran, a key outlet for premium 1121 and traditional basmati varieties, accounts for about 6,000 crore in annual trade. Shipments routed via Bandar Abbas, including consignments for Afghanistan, are reportedly facing delays, raising concerns over payment cycles and working capital.

According to Agricultural and Processed Food Products Export Development Authority, India exported nearly six million tonnes of basmati worth 50,000 crore in 2024-25, with 27,197 crore shipped to West Asia between April and December 2025.

Punjab and Haryana, which together supply roughly 75% of exportable surplus, face downstream risk if trade flows stall. While wholesale prices have firmed 10-15% in recent weeks, prolonged disruption could pressure realizations and farmgate paddy prices.

Published Date: March 3, 2026