Indian rice exporters seek tax breaks, organic push ahead of Union Budget 2026

Indian rice exporters are seeking tax benefits and promotion of high-value varieties such as organic rice ahead of the Union Budget 2026 that could support the competitiveness of the crop and boost exports.

In a letter dated Jan. 2 addressed to finance minister Nirmala Sitharaman, the Indian Rice Exporters Federation has sought government tax incentives for the production and marketing of high-value rice varieties -- including premium basmati, Geographical Indication-tagged or organic non-basmati -- as well as a 4% interest subvention on export credit, 3% support for road and rail freight, and the continuous disbursal of remission of duties and taxes on exported products.

"Our primary focus is to seek tax benefits and incentives available for businesses engaged in sustainable agricultural practices," Dev Garg, vice president of the Indian Rice Exporters Federation, told Platts, part of S&P Global Energy, on Jan. 8.

"There is a growing global trend toward increased demand for sustainably produced rice. Investments in sustainability are not only environmentally responsible but also align with market expectations."

The trade body's proposals come amid market concerns about an oversupply due to bumper rice production.

Platts assessed Indian 5% white rice at $347/metric ton on Jan. 8, down $87/mt year over year, and 5% parboiled at $354/mt, down $85/mt year over year.

As of Dec. 1, 2025, India's combined inventory of milled rice and unmilled paddy increased by 12% year over year to 70.566 million mt, according to the latest data from the Food Corporation of India. This level is significantly higher than the buffer norm of 7.610 million mt set for Jan. 1.

India has become the world's largest producer of rice, with output reaching 150.18 million mt, surpassing China's output of 145.28 million mt, union agriculture minister Shivraj Singh Chouhan said Jan. 4.

"India's huge stock is a looming concern for sellers and buyers, as many buyers choose to wait for prices to come down amid supply pressure," a Delhi-based trader said. "In the international market, everyone is wary of India's supply. This wait-and-watch approach from the buyers pushes exporters to pressure prices and sell at lower levels, [leading to] losses."

"An increase in [remission of duties and taxes on exported products] is one of the policy measures to support exporters," the trader said.

A Raipur-based exporter said, "While the minimum support price for paddy is Rupees 31,000/mt, the rice is being sold at Rupees 28,000/mt in the open market."

Sustainable opportunities

Garg said that numerous companies with carbon credit obligations, incorporated within their corporate social responsibility initiatives, constitute a stable and expanding market for sustainable rice.

"These companies are potential buyers, ensuring consistent demand. While a few Indian companies are already exporting to these markets, there is significant potential for expansion," he said. "With proper channelization, Indian exporters can tap into new markets and increase their global presence."

A significant opportunity exists in advancing the market for non-basmati and exotic rice varieties, according to Garg.

"Promoting non-basmati and exotic rice varieties offers a suitable alternative for various international cuisines," Garg said. "This approach can open up completely new markets that are not currently served by the predominant basmati varieties, such as 1121, 1509, Pusa, or IR64, which have limited growth potential. Cost-saving measures and competitive pricing can make Indian exports more attractive in these markets."

However, policy challenges remain, and a greater need for government support persists.

"The lack of consistent policies for landlocked states, frequent withdrawal of benefits and delays in disbursement pose challenges. Solutions to these concerns have been addressed and proposed to the government," Garg said.

According to S&P Global Energy CERA, India's rice production is expected to reach 151.8 million mt in marketing year 2025-26 (October-September), up 1% year over year, while exports are projected at 24 million mt during the period, up 5.2% from a year earlier.