My Perspective on India’s Rice Export Prospects (31July 2025)
Study and Assumptions
In
preparing this personal analysis, I reviewed publicly available trade
statistics, news reports, and policy announcements through 31 July 2025.
My aim was to understand how recent tariff actions by the United States affect
India’s ability to export rice, particularly basmati, and to determine
practical strategies that could mitigate any negative impact. The analysis
draws heavily on Observatory of Economic Complexity (OEC) data for U.S.
import shares, on reported tariff rates from U.S. government announcements, and
on news accounts of currency movements and export taxes in competing countries.
I assume that reported import values in the OEC represent the most current
full‑year picture (June 2024 – May 2025) and that U.S. tariffs
announced in April 2025 will remain in place at least through late 2025. I
also assume typical export prices and currency exchange rates reported in early
2025 when calculating price differentials.
U.S. Rice Import
Composition
The
U.S. imports rice primarily to satisfy demand for aromatic varieties
(jasmine and basmati) that domestic producers cannot supply. According to OEC
data for June 2024 to May 2025, the U.S. bought roughly US $1.56 billion
of rice. The pie chart below illustrates each supplier’s share (approximate
percentages):
This distribution shows
that Thailand provides about half of all U.S. rice imports, while India
supplies a quarter. China, Pakistan, and Vietnam collectively contribute less
than 10 %, with the remainder coming from smaller producers. Because
aromatic rice dominates U.S. imports, India’s basmati and Thailand’s jasmine
are in direct competition.
Table: Illustrative Price Differential after Tariffs
To make sense of how tariffs affect competitiveness, I constructed a simple example using hypothetical export prices. Thai jasmine rice is assumed to sell at US $1,000 per tonne, while Indian basmati sells at a 25% discount, or US $750 per tonne. Applying the U.S. reciprocal tariffs announced in April 2025—36% on Thai rice and 26% on Indian rice—yields the following landed costs:
|
Item |
Thai
jasmine rice (US$/t) |
Indian basmati rice (US$/t) |
|
Base price per tonne |
1,000 (assumed price) |
750 (25 % less than Thai
price) |
|
Tariff rate |
36% |
26% |
|
Duty amount |
360 |
195 |
|
Landed price after
tariff |
1,360 |
945 |
Implication: Even after the higher U.S. duty, Indian basmati remains roughly 30% cheaper than Thai jasmine. This price gap, combined with a weaker rupee, can allow Indian exporters to retain or grow market share.
Factors Considered
Tariffs
and quotas: In April 2025 the
U.S. imposed reciprocal tariffs on major suppliers. Thai rice now faces a 36%
duty, Vietnamese rice 46%, Pakistan 29%, China 54%,
and India 26%. These rates supersede earlier tariff‑rate quotas that had
allowed duty‑free access for basmati.
Quality and supply chain:
India’s unique advantage lies in its ability to supply both basmati and non‑basmati
rice. Between April 2024 and January 2025 India exported about 230,643 t
of basmati and 51,334t of non‑basmati rice to the U.S., totaling 234,469t
for fiscal year 2023‑24. Thailand, by contrast, shipped almost 850,000t
of jasmine rice. Vietnam primarily sells fragrant rice and has introduced a 5 %
value‑added tax on exports from July 2025. Pakistan supplies only
about 1,500–3,000t per month.
Currency:
The Indian rupee depreciated to around ₹89.5 per US$
in mid‑2025, making exports cheaper in dollar terms. Thailand’s baht
strengthened, reducing its price competitiveness. Vietnam’s new export VAT
effectively increases its selling price by 5 %.
Farmer dynamics and
stocks: India’s rice production
reached a record 151mt in 2024/25, leaving surplus stocks and prompting
farmers to plant high‑yielding varieties such as Pusa 1509, which matures
quickly. These stockpiles give India flexibility to price aggressively.
Thailand, meanwhile, trimmed its export target to 7.5mt due to reduced
competitiveness and strong currency.
Analysis and Insights
- Price competitiveness
favours India. Because Thai
jasmine is significantly more expensive, the additional U.S. tariff
amplifies the price gap. Even after absorbing part of the duty, Indian
basmati remains cheaper.
- Tariffs hurt competitors
more than India. Vietnam and
Pakistan face higher tariff rates (46% and 29%) and, in Vietnam’s case, an
export tax. The U.S. market accounts for only ~5% of India’s basmati
exports, so even a temporary slowdown does not threaten India’s overall
export trajectory.
- Currency and surplus stocks
cushion the blow. The weak rupee and
record inventories allow Indian exporters to price competitively and
absorb part of the 26% duty. Thai exporters, facing a strong baht, have
less room to reduce prices.
- Supply chain reliability
matters. Shipping times of 35–45 days
and the need for long‑term contracts mean that exporters should invest in
logistics and traceability to maintain buyer confidence.
Conclusions
In
my view, India should approach the U.S. tariff challenge as an opportunity to
improve its competitive position.
- Use currency advantage to
absorb tariffs. By leveraging the
weak rupee and adjusting FOB prices, exporters can keep landed prices
attractive. This is key to retaining market share over more expensive Thai
jasmine.
- Invest in value‑added
branding. Premium packaging,
organic certifications, and geographic‑indication labelling will justify
higher retail prices and cushion tariffs. Offering ready‑to‑cook or
fortified basmati products can capture new consumer segments.
- Optimise logistics and
contracts. Securing multi‑year
supply agreements, consolidating shipments to reduce freight costs, and
investing in U.S. warehousing will make Indian exports more reliable.
- Diversify markets and pursue
diplomacy. The US is
high-visibility, but 84–85% of Indian rice exports go elsewhere. Since
the U.S. takes only a small share of Indian basmati, expanding sales in
the Middle East, Africa, and Europe will offset any U.S. slowdown. At the
same time, engaging in trade negotiations could lead to reciprocal tariff
reductions or a special status for basmati as a heritage product.
To conclude, while the US tariff hike is
significant, it does not fundamentally undercut India’s capacity to
export basmati rice profitably to the US. The most
likely short-term impact is a squeeze on margins, but India’s exporters have
enough buffer in price and scale—plus entrenched supply and brand presence,
especially in the diaspora-driven segment
The
smart path forward lies in combining this cost resilience with greater focus on
branding, supply chain efficiency, and market diversification. If those are
embraced, India can not only weather the US tariff storm but actually come
out stronger, with broader markets and deeper roots in global rice trade.
Research
and reading sources:
Tariffs
could reshape US rice prices | Food Business News https://www.foodbusinessnews.net/articles/28033-tariffs-could-reshape-us-rice-prices
Global
Rice Market Divergence: India's Price Plunge vs. Bangladesh's Inflationary
Surge- https://www.ainvest.com/news/global-rice-market-divergence-india-price-plunge-bangladesh-inflationary-surge-2507/
Indian
rice market to face short-term disruption by US reciprocal tariffs | S&P
Global-https://www.spglobal.com/commodity-insights/en/news-research/latest-news/agriculture/040325-indian-rice-market-to-face-short-term-disruption-by-us-reciprocal-tariffs
Vietnam
fragrant rice prices surge as new tax weighs on export markets | S&P Global-https://www.spglobal.com/commodity-insights/en/news-research/latest-news/agriculture/080125-vietnam-fragrant-rice-prices-surge-as-new-tax-weighs-on-export-markets
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