NextFin news, India's basmati rice exports to the United States have been severely impacted by a combination of natural and trade-related challenges as of Tuesday, September 23, 2025. The northern Indian state of Punjab, a major basmati rice growing region, has experienced its worst flooding since 1988, submerging over 150,000 hectares of farmland and damaging an estimated 10% of potential basmati output, according to the Indian Rice Exporters' Federation (IREF).
Simultaneously, the Trump administration has imposed a 50% tariff on Indian goods, including basmati rice, citing India's importation of Russian Federation oil. This tariff effectively doubles the cost of Indian basmati rice for American consumers, making it significantly more expensive in the US market.
India supplies approximately 65% of the world's basmati rice, with Pakistan providing most of the remainder. However, Pakistan faces a much lower tariff of 19% on basmati rice exports to the US, giving it a competitive advantage amid India's increased export costs. Malik Faisal Jahangir, chairman of the Rice Exporters Association of Pakistan, told Arab News that the 50% tariff on Indian rice will price it out of the US market, a sentiment echoed by Mudassar Ahmed of Rice Partners, a Pakistani agricultural cooperative.
The flooding in Punjab has devastated farmers who typically hold larger land parcels averaging 8.95 acres, compared to the national average of 1.08 acres, and who rely on mechanized, resource-intensive farming often financed through high-interest loans. The damage threatens their financial stability due to potential crop losses and debt burdens.
Punjab province in Pakistan has also been affected by floods, with over 1,000 deaths reported since August 2025 and an estimated 30-35% impact on their basmati rice output. Despite this, Pakistan's basmati rice exports increased last fiscal year, reaching 772,725 tons valued at $876.9 million, according to the Pakistan Bureau of Statistics.
India exported 234,467 metric tons of basmati rice valued at $300 million to the US in the last fiscal year, as per the Indian Agricultural and Processed Food Products Export Development Authority. The US rice import market has grown substantially, with aromatic varieties like basmati accounting for 60% of imports.
Vinod Kumar Kaul, executive director of IREF, acknowledged that while Pakistan can supply some basmati rice due to tariff advantages, it cannot fully compensate for the quantity India typically provides.
The combined effect of severe flooding and high tariffs poses a significant threat to India's basmati rice export sector, potentially reshaping market dynamics in the US and globally.
Explore more exclusive insights at nextfin.ai.
