CHANDIGARH: India's basmati rice exports are facing mounting disruption as the strategic waterways of the Bab al-Mandab and the Strait of Hormuz remain affected, raising concerns over global trade through the crucial maritime corridor linking the Red Sea and the Gulf of Aden.
The simultaneous disruptions have affected India's basmati rice shipments to key markets in the Middle East and Europe, sharply increasing freight and insurance costs while leaving exporters under severe liquidity pressure.
Nearly 0.5 million metric tonnes of basmati and non-basmati rice bound for Gulf countries, including around 0.3 million metric tonnes of basmati originally destined for Iran, is currently stranded at Container Freight Stations (CFS) at Mundra and Kandla ports in Gujarat.
India accounts for nearly 45 per cent of global rice trade and exports rice to more than 140 countries, competing with major exporters such as Pakistan and Thailand. However, India's total rice exports, including basmati and non-basmati varieties, declined by 7.5 per cent year-on-year to $11.53 billion in FY-26.
During the April-June quarter of FY-26, India's rice exports increased by more than 4 per cent year-on-year to approximately $3.03 billion. In June alone, the country exported rice worth more than $1 billion, nearly 16 per cent higher than the corresponding month last year, supported by the temporary easing of regional tensions and partial restoration of supply chains to Gulf markets.
Saudi Arabia has emerged as India's largest destination for basmati rice exports, importing nearly 1.2 million metric tonnes annually, while Iran imported around 0.8 million metric tonnes during the previous financial year.
Together, the two countries account for almost 2 million metric tonnes of India's annual basmati exports, making stability in the Gulf shipping corridor critical for the industry.
Speaking to this newspaper, Ranjit Singh Jossan, Vice-President of the Basmati Rice Millers and Exporters Association, said the situation is particularly alarming as Saudi Arabia has become the largest importer of Indian rice, while Iran remains the second-largest market for Indian basmati. If disruptions in both the Red Sea and the Strait of Hormuz continue for an extended period, India's basmati exports, port operations, container logistics and exporters' financial health could suffer serious consequences.
"Nearly 0.5 million metric tonnes of basmati and non-basmati rice is currently stranded at Container Freight Stations (CFS) at Mundra and Kandla ports in Gujarat because of prolonged uncertainty surrounding shipping through the Strait of Hormuz. Of this volume, industry estimates suggest that more than 0.3 million metric tonnes was originally destined for Iran, including shipments contracted by the Government Trading Corporation (GTC) of Iran as well as several leading private Iranian importers. The simultaneous disruption around the Strait of Hormuz and the Bab al-Mandab has created an unprecedented challenge for India's export sector," he said.
Jossan said Saudi Arabia and Iran together import nearly 2 million metric tonnes of Indian basmati rice annually, while the wider Middle East remains one of India's most important export destinations.
"Any disruption in these strategic shipping routes immediately affects India's agricultural exports and global food supply chains," he said.
He noted that security threats in the Red Sea following repeated Houthi warnings have significantly slowed container movement through Jeddah, Jizan, Aqaba and other regional ports, while uncertainty in the Strait of Hormuz has continued to affect cargo movement for several months.
Jossan claimed that one vessel carrying cargo for Iran, which had sailed from India nearly a month ago, reportedly returned to Jamnagar Port following maritime restrictions and operational uncertainties in the region.
"In addition, bookings of three vessels scheduled to transport Indian export cargo to Iran have reportedly been cancelled by vessel owners because of the prevailing security situation. The cancellations have added to the backlog of export cargo awaiting shipment and increased uncertainty for exporters with commitments to Iranian buyers," he said.
"The crisis extends beyond delayed shipments. The biggest concern today is blocked working capital. We have already invested in paddy procurement, milling, processing, packaging, transportation and port handling. When shipments remain stranded for weeks or months, working capital gets locked, banks continue charging interest, and exporters face a serious financial crisis," he said.
Jossan warned that unless normal navigation through the Strait of Hormuz and the Bab al-Mandab is restored at the earliest, the consequences could extend well beyond India's export sector. The longer the crisis continues, the greater the financial burden on exporters and the higher the cost for global buyers, he claimed.
Bal Krishan Bali, president of the association, said the uncertainty has also pushed ocean freight rates to record levels while marine insurance premiums continue to rise, substantially increasing the overall cost of exports. The Red Sea crisis has forced vessels to adopt longer alternative routes, resulting in higher logistics costs and longer transit periods.
"The disruption in the Red Sea has become a major challenge for Indian rice exports. Longer sailing routes are increasing freight costs and delaying deliveries, making Indian rice more expensive for buyers, particularly in the Middle East and Europe," Bali said.