Key Highlights

• Around 400000 tonnes of basmati rice are currently stranded at ports or in transit.

• Major export hubs such as Mundra and Kandla ports are witnessing shipment delays.

• Container freight rates have jumped from 1200–1800 dollars to 3500–4500 dollars.

• Shipping companies are adding extra surcharges of up to 2000 dollars per container.

• Basmati prices in domestic markets have fallen nearly 7–10 percent within 72 hours.

• Exporters face payment risks of nearly ₹6000 crore linked to Iranian buyers.

• Companies such as KRBL and LT Foods may experience margin pressure due to rising logistics costs.

India Basmati Rice Export Crisis Explained

India’s basmati rice export sector is facing one of its most serious disruptions in recent years. Rising geopolitical tensions involving Iran, Israel, and the United States are affecting key shipping routes that connect South Asia with West Asian markets.

These routes are extremely important for India’s basmati trade. Nearly 70 to 75 percent of India’s premium basmati exports are shipped to West Asian countries, making the region the backbone of the industry.

As tensions increase in the region, shipping companies and logistics operators are becoming cautious, leading to delays, higher costs, and uncertainty across the entire export chain.

Thousands of Tonnes of Basmati Rice Stranded

Industry estimates suggest that around 400000 tonnes of basmati rice are currently stuck due to shipping disruptions.

The stranded cargo is divided into two major segments:

• Around 200000 tonnes waiting at Indian ports such as Mundra and Kandla because ships are delayed or unavailable.

• Another 200000 tonnes already in transit, moving through maritime routes connecting the Arabian Sea and the Persian Gulf.

This situation has created a major bottleneck in India’s export pipeline. Exporters now face uncertainty over delivery schedules and contract obligations with overseas buyers.

Shipping Costs Surge Dramatically

One of the biggest impacts of the crisis has been the sharp rise in freight costs. Earlier, exporters typically paid 1200 to 1800 dollars per container for shipments to West Asia. However, due to security concerns and shipping disruptions, freight rates have surged to 3500 to 4500 dollars per container.

In addition to the base freight cost, many shipping companies are also charging extra surcharges of up to 2000 dollars per container.

Overall international freight costs have increased by about 15 to 20 percent within just a few days, putting pressure on exporters who already operate on tight margins.

Fuel and Insurance Costs Add Further Pressure

Shipping operators are also facing higher operating costs.

The price of bunker fuel, which powers cargo ships, has increased from roughly 520 dollars to around 700 dollars per metric tonne. This rise directly affects shipping rates because fuel is one of the largest operating expenses for vessels.

At the same time, insurance costs have increased sharply. Ships traveling through conflict sensitive waters must now pay higher war risk premiums.

Insurance charges have increased from around 0.2–0.3 percent of vessel value to nearly 0.5 percent or more, representing a 40 to 60 percent increase in risk coverage costs. These additional expenses eventually fall on exporters through higher freight and charter rates.

Domestic Basmati Prices Fall

The export slowdown is already affecting the domestic market.

With shipments stalled and inventories building up, basmati prices in India have reportedly fallen by around 7 to 10 percent within just three days during early March 2026.

For exporters, this creates a double challenge:

• Unsold inventory ties up working capital

• Delayed export payments increase financial pressure

Exporters must continue purchasing rice from farmers while waiting for shipments and payments from overseas buyers.

Impact on Listed Basmati Export Companies

Investors are closely watching companies that depend heavily on global basmati exports.

Two major listed exporters are:

KRBL Limited- Known for global basmati brands and strong export presence.

LT Foods- Owner of well known brands such as Daawat and Royal.

Both companies generate a significant share of revenue from international markets including West Asia, Europe, and North America.

Basmati exporters generally operate with EBITDA margins of around 10 to 15 percent. When freight costs rise by thousands of dollars per container, these margins can shrink quickly unless companies renegotiate contracts or pass the cost to buyers.

Exporters Shift Strategy to Reduce Risk

To protect exporters from unpredictable logistics costs, the Indian Rice Exporters Federation has advised companies to avoid new CIF contracts. In CIF contracts, exporters must pay for cost, insurance, and freight, which means they bear most of the shipping risk.

Instead, exporters are being encouraged to shift toward FOB contracts, where buyers take responsibility for shipping once the cargo leaves the port. This strategy helps exporters reduce exposure to rising freight and insurance costs.

Payment Risk From Iranian Buyers

Another major concern is financial settlement with Iranian buyers.

Industry sources suggest that around ₹6000 crore in payments could be at risk if banking channels become complicated due to geopolitical restrictions.

If payments are delayed or blocked, exporters may face liquidity challenges. Timely payments are critical because exporters rely on this cash flow to buy paddy from farmers and fund ongoing operations.

Industry Seeks Government Support

Exporters have approached the government through industry bodies and requested several relief measures.

Key requests include:

• Declaring the disruption as a force majeure event to avoid penalties for delayed shipments

• Waiving port storage and demurrage charges for stranded cargo

• Providing temporary working capital support through banks

• Helping exporters reroute or recall shipments from risky maritime routes

These measures could help companies manage the financial pressure until shipping conditions stabilize.

Exporters Explore New Markets

To reduce dependence on West Asia, some exporters are trying to redirect shipments to other regions such as:

• Europe

• United States

• Africa

Demand for premium basmati rice remains strong in these markets. However, these regions cannot fully replace the massive demand from West Asia in the short term.

Some companies are also relying on domestic sales and branded retail products to offset export delays.

A Critical Moment for India Basmati Trade

Basmati rice is one of India’s most valuable agricultural export products and generates billions of dollars in foreign exchange every year.

The current crisis highlights how geopolitical tensions can quickly disrupt global food supply chains. Shipping routes, insurance costs, payment channels, and maritime security are now key factors influencing export economics.

For investors and industry participants, the next few weeks will be critical. The main factors to watch include:

• Stability of maritime routes in West Asia

• Normalization of freight costs

• Payment settlements with Iranian buyers

• Government support for exporters

If the geopolitical situation improves, most of the stranded cargo could still reach its destination markets. However, if tensions continue, exporters may face longer margin pressure and slower export growth.