US -Israel crisis stalls Indian basmati shipments to Middle East
Tankers and container ships are avoiding the Strait of Hormuz since insurers have cancelled coverage.
INDIA – Nearly 400,000 tonnes of Indian basmati rice is stranded at ports and in transit after freight rates more than doubled following recent military strikes by the United States and Israel on Iran, disrupting trade flows through the Strait of Hormuz, according to Reuters.
India, the world’s largest exporter of basmati rice, relies heavily on Middle Eastern markets, with more than half of its shipments destined for countries such as Saudi Arabia, Iran and the United Arab Emirates.
The latest logistics shock has left exporters grappling with rising container costs, insurance cancellations and vessel rerouting, all of which are constraining shipment execution during a peak export window.
Satish Goel, president of the All India Rice Exporters’ Association (AIREA), said about 200,000 tonnes of rice is currently stuck in transit, while a similar volume is stranded at Indian ports awaiting shipment.
“Rising container costs are inhibiting exporters’ ability to move the stocks and there are no alternative markets that can absorb the volume,” he noted.
Shipping lines are reportedly avoiding the Strait of Hormuz, a critical chokepoint that handles roughly one-fifth of global oil trade and a significant share of containerized cargo bound for the Gulf.
Insurers have either raised premiums sharply or withdrawn coverage for vessels transiting the region, compounding freight volatility. AIREA has approached India’s Ministry of Commerce and Industry seeking intervention.
Price pressure following record harvest
The disruption comes at a sensitive time for India’s rice sector. The country harvested a record basmati crop this season, supported by favorable monsoon conditions and expanded acreage in key producing states such as Punjab, Haryana and western Uttar Pradesh.
According to data from India’s Agricultural and Processed Food Products Export Development Authority (APEDA), India typically exports between 4.5 and 5 million tonnes of basmati annually, generating export earnings exceeding USD 4.5 billion in recent years.
With exports slowing, domestic basmati prices have declined by nearly 6%, reflecting excess supply and liquidity pressure among millers and exporters.
Traders indicate that exporters are refraining from accepting new Middle East orders and are instead prioritizing shipments under existing contracts to limit exposure.
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