India’s rice export ambitions face geopolitical headwinds

• Rising freight and insurance costs disrupt shipments as Gulf tensions strain trade flows
• Exporters shift focus toward Africa while adopting FOB terms to limit financial exposure

India’s rice export programme remains broadly on track, but escalating geopolitical tensions in West Asia are creating new challenges for exporters just as the fiscal year approaches its final stretch. India shipped about 17.08 million tonnes of rice, including basmati and non-basmati varieties, by the end of January 2026. To reach the annual target of 20.8 million tonnes, exporters still need to dispatch roughly 3.7 million tonnes before the close of the marketing year.

Early 2026 shipments reflected steady demand. Rice exports in the first two months of the calendar year reached 1.3 million tonnes valued at $599.3 million, up 5% year on year in volume. However, export earnings declined 11.2% as prices weakened. The average export price fell to $464.1 per tonne, down 15.4% from a year earlier, indicating sustained pressure in global rice markets.

West Asia continues to dominate India’s rice trade. The region imported around 5.38 million tonnes between April 2025 and January 2026, accounting for roughly 70% of shipments and remaining the primary market for premium basmati exports.

Freight disruptions and contract risks

Tensions in the Middle East have begun to disrupt logistics and financing conditions. The Indian Rice Exporters Federation has advised exporters to avoid new CIF contracts for Gulf destinations and instead transact on FOB terms to limit exposure to volatile freight and insurance costs.

Insurance premiums for vessels transiting the Gulf have surged, while bunker fuel costs and freight rates are rising. The disruption has already left shipments delayed and invoices unsettled for cargoes dispatched earlier in the year.

Trade flows shift toward Africa

Exporters are increasingly redirecting cargoes to West Africa, where shipping routes remain relatively stable. Several February loadings were diverted to African destinations, including Benin, helping maintain shipment momentum despite the Gulf disruption.

The adjustment reflects a broader shift in trade strategy. While weaker U.S. export projections offer some relief for India in global markets, Pakistan is expanding its presence in parts of the Caribbean. For India, sustaining export volumes may increasingly depend on African demand until shipping conditions in the Gulf normalise.