50% of India's Basmati Exports at Risk? Prices Could Fall 5–10% After Strait of Hormuz Closure

India's basmati rice industry is facing fresh uncertainty after Iran announced the closure of the Strait of Hormuz, a key global shipping route. Industry experts warn that basmati rice prices could decline by 5–10% as export shipments to major Middle Eastern markets face disruptions and freight costs surge.

The development comes shortly after basmati prices had rallied sharply following the interim US-Iran peace agreement, which had triggered strong buying activity from exporters targeting West Asian markets.

Export Disruption Hits Basmati Trade

According to industry estimates, nearly 60,000 tonnes of basmati rice destined for West Asian countries are currently in transit and could face logistical challenges due to shipping disruptions.

Basmati Export Exposure to West Asia

Particulars	Details
India's Annual Basmati Production	7.2 Million Tonnes
Annual Basmati Exports	6 Million Tonnes
Share of Exports to West Asia	Around 50%
Rice Currently in Transit	60,000 Tonnes
Expected Price Impact	5–10% Decline

Industry representatives believe export demand could weaken if shipping routes remain blocked for an extended period.

Why Basmati Prices May Fall

Following the temporary easing of geopolitical tensions between the US and Iran, exporters had increased procurement activities, causing basmati prices to rise by nearly 15–20% in recent weeks.

However, the sudden announcement regarding the Strait of Hormuz closure has changed market sentiment.

Key Reasons Behind Potential Price Decline

Factor	Impact
Shipping Disruptions	Negative
Export Delays	Negative
Higher Freight Costs	Negative
Weak Export Demand	Negative
Inventory Build-Up	Negative

As export orders slow down, domestic basmati prices may come under pressure in the short term.

Major Basmati Export Markets at Risk

The Middle East remains one of the largest destinations for Indian basmati rice exports.

Top West Asian Markets for Indian Basmati

Country	Importance
Saudi Arabia	Major Importer
Iran	Key Market
Iraq	Large Buyer
UAE	Strategic Market
Yemen	Growing Demand

Together, these countries account for nearly half of India's total basmati rice exports, making the region critical for the industry.

Indian Tea Exports Also Face Pressure

The crisis is not limited to rice exports.

India's tea industry, which achieved a record 285 million kg of exports in 2025, is also facing significant challenges as nearly 50% of tea shipments are linked to Middle Eastern markets.

Impact on Tea Industry

Metric	Details
Tea Exports in 2025	285 Million Kg
Share Going to Middle East	Around 50%
Current Situation	Export Slowdown
Key Challenge	Higher Freight Charges

Exporters have reported that rising shipping costs through alternative routes and disruptions in the Red Sea corridor have significantly impacted tea shipments.

Economic Impact on Indian Exporters

The Strait of Hormuz is one of the world's most important maritime trade routes, handling a significant portion of global energy and commodity shipments.

For India, prolonged disruptions could result in:

• Lower basmati rice prices
• Export shipment delays
• Increased logistics costs
• Pressure on exporter margins
• Reduced competitiveness in overseas markets

Sector-Wise Impact

Sector	Impact Level
Basmati Rice	High
Tea Exports	High
Logistics	High
Shipping	High
Agricultural Exports	Moderate to High

Industry Outlook

While the current situation remains fluid, exporters are closely monitoring developments in the Middle East.

If shipping operations normalize quickly, the impact may remain temporary. However, prolonged disruptions could lead to sustained pressure on export-oriented agricultural commodities, especially basmati rice and premium tea exports.

Key Highlights

• Basmati rice prices may decline 5–10%
• Strait of Hormuz closure threatens export shipments
• Around 60,000 tonnes of rice currently in transit
• West Asia accounts for 50% of India's basmati exports
• Basmati prices had earlier surged 15–20%
• Indian tea exports also face disruption
• Freight costs rising across export routes
• Exporters monitoring geopolitical developments closely

Conclusion

The closure of the Strait of Hormuz has created fresh uncertainty for India's agricultural export sector. While basmati rice prices may correct by 5–10% in the near term due to export disruptions, the long-term impact will depend on how quickly shipping routes reopen. With the Middle East accounting for a significant share of India's rice and tea exports, industry participants remain cautious amid rising geopolitical risks.

Why are basmati rice prices expected to fall?

Prices may decline due to export disruptions, higher freight costs, and weaker demand from Middle Eastern markets following the Strait of Hormuz closure.

How much basmati rice is currently affected?

Approximately 60,000 tonnes of basmati rice shipments are currently in transit to West Asian countries.

Which countries import the most Indian basmati rice?

Saudi Arabia, Iran, Iraq, UAE, and Yemen are among the largest importers of Indian basmati rice.

How much of India's basmati exports go to West Asia?

Around 50% of India's total basmati rice exports are shipped to West Asian markets.

Is the tea industry also affected?

Yes, nearly 50% of India's tea exports are linked to Middle Eastern markets, making the sector vulnerable to shipping disruptions.