New Delhi, March 15 (NationPress) The export volume of India's basmati rice is projected to maintain a steady course through FY26 and FY27, anticipating a growth of up to 2% from the last fiscal year's export volume of 6.06 million tonnes (MT), according to a report released on Monday. Despite the ongoing conflict in the Middle East, demand is expected to remain strong.

Increased demand from countries such as Saudi Arabia, Iraq, the United Arab Emirates, and Yemen is expected to compensate for the decline in exports to Iran, a significant market, as noted in the report by Crisil Ratings.

Last fiscal year, Iran represented around 14% of the export volumes for this variety, while the Middle East and other West Asian nations together accounted for 70-72%. The ongoing conflict has caused disruptions in supply chains, which could adversely affect exports, particularly to Iran.

If logistical difficulties persist for about a month, the projected impact on basmati rice trade volume could be between 3.5-3.7 lakh tonnes, according to the agency's forecast.

“The volume of Indian basmati rice exports is anticipated to remain resilient due to an expected 5-6% increase in demand from other Middle Eastern nations, which collectively represent 55-60% of the export volume,” stated Nitin Kansal, Director at Crisil Ratings.

Moreover, exporters are likely to transfer any increases in freight and insurance costs to their customers, which should safeguard their operating profitability. Despite a rise in debt levels, their balance sheets are expected to remain robust, ensuring stable credit profiles, as highlighted in the report.

“The working capital cycle for basmati rice exporters is likely to extend due to logistical challenges, including limited ship availability, longer transit times, and payment-related difficulties, leading to a rise in working capital debt,” the report indicated.

Basmati rice exporters are also seeking alternative routes to bypass the Strait of Hormuz to secure supplies to the Middle East. However, this could lead to increased transit times, further elongating the working capital cycle and resulting in a 10-15% increase in working capital needs.

The realization of basmati rice prices is expected to remain stable in FY27 due to resilient demand and stagnant production levels of basmati paddy in major producing regions, following excessive rainfall, as per the ratings agency.

With India being the largest producer and exporter of basmati rice—accounting for approximately 85% of the global volume—the export market constitutes nearly two-thirds of India's annual basmati rice sales by volume. This makes the industry highly susceptible to geopolitical dynamics.