India’s basmati rice export sector has taken another blow, this time due to the escalating Israel-Iran conflict. Following the impact of the 26% US tariff under Donald Trump, the crisis has halted shipments to Iran, India’s second-largest basmati importer, affecting over ₹3,000 crore worth of orders. With operations at Iran’s Bandar Abbas port suspended and two Indian basmati-laden ships stranded, exporters are in a wait-and-watch mode as banking operations in Iran remain frozen. India exported 7 lakh metric tonnes of basmati to Iran in FY 2023–24, making up nearly 15% of total exports.

Punjab, which accounts for 40% of India’s basmati production, is bearing the brunt. Prices of basmati have dropped from ₹7,100 to ₹6,200 per quintal, and wholesale domestic rates have dipped from ₹71 to ₹62 per kg. Farmer and exporter anxiety is rising as the Iranian currency devalues, and concerns grow over whether future payments will be honoured. Insurance firms have backed out of covering shipments to Iranian ports, further complicating exports. Export prices have declined 10–15%, and with new crop arrivals expected by mid-September, the situation could deteriorate.

The Agricultural and Processed Food Products Export Development Authority (APEDA) is holding internal discussions about potentially suspending exports to Iran temporarily. Meanwhile, shipping disruptions via the Strait of Hormuz and falling global demand have exporters reconsidering procurement from millers, causing a ripple effect in local markets. Farmers like Sanampreet Mahrok from Fazilka worry that prices for PUSA 1509 and 1121 varieties may fall by ₹500 per quintal. As fears of a saturated domestic market mount, experts warn that unless the situation stabilises quickly, the entire basmati value chain from farmers to exporters faces substantial financial stress.