The reopening of the Strait of Hormuz might give Pakistani Basmati exporters an opportunity to grab some market share from India in the Middle East. Pakistani Basmati exporters now have a subsidy-led price advantage. Can it dent India’s Basmati sales in the Middle East in the long-term?

India Today News Desk, Written By: Sushim Mukul

A close-up shot of a giraffe, perhaps to emphasise length, on a packet of Kainat 1121 rice is a common sight in supermarkets across the UAE. Shelves away, it is equally common to find packets of Daawat and India Gate. The India-Pakistan rivalry is more than cricket and geopolitics. For decades, Basmati rice has been another area of India-Pakistan rivalry. With India as the biggest producer and exporter of Basmati, Pakistani exporters battle for shelf space and market share in Saudi Arabia, the UAE, Iran, Iraq, Kuwait, Qatar, Oman, the UK and parts of the European Union.

FYI, Kainat is essentially a counterfeit to the 1121 Basmati variety developed by Indian agricultural scientist Vijay Pal Singh, who drew inspiration from his fufa ji’s checklist of what true Basmati should be. The variety took two decades to develop and helps India generate around Rs 25,000 crore annually.

India’s biggest Basmati markets are Saudi Arabia, Iran and Iraq, while Pakistan’s top three destinations include the UAE, Saudi Arabia and Iran. Clearly, the Middle East (or the West Asian region) is the principal battleground of the India-Pakistan Basmati trade.

Now in June, as shipping through the Strait of Hormuz moves towards normalisation after months of disruption, a question is being asked in rice-trading circles. Will Pakistan use the reopening to grab market share from India in the Middle East, the world’s biggest imported Basmati-consuming region?

The concern among Indian traders is due to Pakistan’s duty drawback scheme that allows its exporters to offer Basmati at lower prices. The Hindu BusinessLine reported last week that Indian exporters fear Pakistan’s subsidy could depress global price realisations. Pakistan’s lower price offering, after months of disruption in trade, might “become a benchmark internationally” and make it harder for Indian sellers to ask for higher prices, said an exporter.

The concern is understandable and valid. While India dominates global Basmati exports, accounting for roughly 70-80% of the trade by volume, Pakistan is the only other major exporter of the aromatic grain. So, can Pakistan really challenge India’s Basmati edge as the gates of Hormuz fully reopen? Will Pakistan’s subsidy end up hitting Indian Basmati exporters?

First, let us have a look at the Pakistani scheme that it is using to help boost the competitiveness of its Basmati exports.

PAKISTAN IS PUSHING FOR A BIGGER BASMATI SLICE

In January, Pakistan’s Ministry of Commerce introduced a Drawback of Local Taxes and Levies (DLTL) scheme for rice exports. Under the order, exporters became eligible for a duty drawback of 9% of the export value on Basmati exports priced at $750 per tonne or above. Lower-value shipments were eligible for a 3% benefit, reported Karachi-based Dawn newspaper on January 27.

In simple terms, Pakistan gave exporters a partial refund on taxes they paid earlier, allowing them to sell Basmati abroad at lower prices and compete more aggressively with Indian traders in global markets.

Pakistan’s Rice Exporters Association argued that the scheme would improve competitiveness and allow exporters to offer lower prices in international markets, Dawn reported.

The benefits are set to expire on June 30. So, there’s now a short window of around 10 days left. But did Pakistan’s Basmati exports see a boom after the scheme was launched in January?

DID PAK’s BASMATI SUBSIDY TRANSFORM ITS EXPORTS?

Not quite. The results so far have been grim as this was the time when the Iran war had started to cast its shadow on key trade routes.

A March 17 report in Pakistan’s Dawn newspaper showed that rice exports declined by 35.38% in February despite the government’s subsidy programme. Official Pakistan Bureau of Statistics data cited by the report showed Basmati exports fell 19.21% in value and nearly 28% in quantity during the month.

Exporters speaking to the daily argued that the scheme had failed to address deeper structural problems. A leading exporter blamed high domestic prices and hoarding for eroding Pakistan’s competitiveness. Another exporter said rebates offered at the export stage could not compensate for weaknesses in farm productivity, irrigation, seed quality and input costs.

SO, WHAT HAPPENS NOW IN INDIA-PAK BASMATI BATTLE?

The Gulf region, a heartland of global Basmati consumption, has been largely inaccessible for exports from India and Pakistan since the start of the war in the Middle East and the choking of the Strait of Hormuz. Basmati exporters faced higher freight rates, insurance premiums, delays and uncertainty.

Pakistan’s exporters face rising shipping and logistics costs, as they lack the scale. Indian exporters grappled with freight route volatility and shipping container shortages. But some trade had been going on.

An April 9 report by S&P Global Commodity Insights noted that strong Middle East demand continued to support Basmati prices in both India and Pakistan despite geopolitical disruptions. Buyers in Saudi Arabia, the UAE and Iran were actively replenishing inventories.

With shipping routes normalising, Pakistan could regain some ground and competitiveness by keeping prices low is what Indian Basmati exporters, speaking to The Hindu BusinessLine, highlighted. A leading exporter told the newspaper that Pakistan’s threshold price of $750 per tonne effectively becomes a benchmark in international negotiations, potentially putting pressure on Indian sellers seeking higher realisations.

India’s Basmati exports realised an average $920 per tonne in April 2026, according to the data by Agricultural and Processed Food Products Export Development Authority (APEDA).SO, IS THAT A MATTER OF CONCERN FOR INDIA?

Experts argue that India’s dominant share of the global Basmati trade acts as a cushion against such shocks. “India’s vast export volumes, established brands and rooted presence in key markets make it difficult for competitors like Pakistan to erode its position in the short term,” said Om Prakash, the editor of Kisan Tak, India Today Digital’s sister portal focused on agriculture.

“The biggest hurdle for Pakistani Basmati is scale,” added Prakash of Kisan Tak. He said, “The reopening of Hormuz does not erase the structural advantages India enjoys in branding, scale, supply chains and customer relationships.”

India exported about 4.7 lakh tonnes of Basmati rice in April 2026 alone. Over the entire 2025-26 financial year, India’s Basmati exports reached 6.52 million tonnes worth $5.67 billion. By comparison, Pakistan’s Basmati exports were estimated at around one million tonnes. India roughly exports more than six times as much aromatic rice as Pakistan.

“Pakistan can dent India’s Basmati advantage by challenging its exclusive GI claims and branding rights in premium markets, but in a fair and competitive export environment, India’s scale and presence remain difficult to dislodge,” Om Prakash told India Today Digital.

“Even if Pakistani Basmati gains market share in specific destinations, the overall gap has remained enormous. India’s export ecosystem includes hundreds of mills, established global brands, long-term distributor networks and deep penetration in Gulf markets such as Saudi Arabia, the UAE, Kuwait, Qatar and Oman,” according to Om Prakash.

The subsidy, therefore, provides Pakistani exports with a short-term pricing advantage, particularly in price-sensitive markets. The subsidy for Pakistani exporters might artificially lower prices for Indian traders, but is unlikely to pose a serious challenge to India’s overall dominance in Basmati exports.

“India’s strength is consistency, quality perception, scale and established brands,” says Om Prakash, adding that the advantage has been built over decades and cannot be challenged through a temporary subsidy programme.

Pakistan’s incentive scheme might improve Basmati’s ability to compete on price. But will it trigger a sustained surge in exports? That remains to be seen. For now, Indian exporters might face short-term pressure in Middle East markets, but India’s structural advantages — scale, branding and distribution networks — are likely to preserve its dominant position.

Published By: Sushim Mukul

Published Date: June 23, 2026