The increase was also driven by other factors, like changes in government’s rice export policy and weather patterns.

Pallavi Nahata

India-Pakistan tensions appear to be driving up prices of Basmati rice.

Prices of Basmati rice in India have surged by about 18% over the past two months, rising from Rs 55 to Rs 65 per kilogram. Of this, about 10-12% of the rise has just been in the past few days, said Akhilesh Jain, director at agfintech company Agrotech Risk Pvt.

The recent surge has more to do with market sentiment amid the ongoing war-like scenario, according to agri economist Siraj Hussain. There is too much rice available in the market, he added. In fact, given the supply, the government has also recently increased the allocation of rice for ethanol recently.

The government has approved an additional 28 lakh tonnes of rice for ethanol production, after allocating 24 lakh tonnes previously for the ethanol supply in year beginning November 2024.

The increase was also driven by other factors, Jain said. The Indian government removed the minimum export price of $950 per tonnes, making basmati rice more competitive globally and boosting exports.

Erratic weather patterns and climate change have also affected crop yields. Rising input and transport costs also contribute to the price rise, according to Jain. Together, these forces highlight the complex interplay of global trade, climate, and market dynamics.

Given that the recent surge might be because of the ongoing geopolitical scenario, some fluctuations are not entirely unexpected and might subside soon enough, said food and trade policy analyst Devinder Sharma.

However, Jain expects prices to remain elevated in the near term. With record-high rice inventories, the Indian government is easing export restrictions, including removing the floor price for basmati rice exports, to boost shipments and support farmers. This move aims to make Indian rice more competitive globally, particularly against Pakistan, which has increased its rice exports, explained Jain.

However, challenges such as climate variability, water scarcity, and rising input costs continue to pose risks to production and supply stability. These factors, combined with strong international demand, suggest that basmati rice prices may continue to experience upward pressure in the coming months, he added.

Published Date: May 9, 2025