Indian rice exporters eye bigger US share after trade deal

Indian rice exporters expect to capture a larger share of the US market following the trade deal that lowers US import duties, with the biggest gains likely in basmati rice, while Thai and Pakistani exporters said they expect minimal impact due to different market positions and demand patterns, market sources told Platts, part of S&P Global Energy, Feb. 3.

The US-India trade deal announced on Feb. 2 includes a reduction of tariffs on Indian goods to 18%, down from the previous 25% reciprocal duties plus an additional 25% levied in response to India's Russian oil imports. The agreement aims to strengthen trade ties and expand India's access to the US market.

"The US is importing rice worth about $1.2  billion from countries other than India; nations such as Thailand and Pakistan account for a significant portion of these purchases," Dev Garg, vice president of the Indian Rice Exporters Federation, said. "Because these countries are now taxed at 19 % whereas India is taxed at 18%, we are in a much more favorable position to capture a larger share of this export market."

"This tariff situation will prove beneficial for India going forward, as the aim is to increase our exports from $391 million last financial year to a significantly higher level this year," Garg added.

India Rice Exports Federation (IREF) mirrored Garg's views in a statement.

"Notably, India's rice exports to the US rose despite a steep increase in duty—from 10% initially to 50%—underscoring that Indian rice remains essential for buyers and consumers," IREF said in a statement dated Feb. 3.

"This trend reinforces the Federation's view that India's competitiveness is structurally strong, and that tariff parity will translate quickly into higher volumes and improved price positioning."

India's total rice exports to the US were at 326,400 metric tons in January-November 2025, up from 288,363 mt from the same period a year earlier, according to data from the Agricultural and Processed Food Products Export Development Authority.

Indian basmati market to benefit

"Regarding basmati rice, there's some substitution possible from Pakistani varieties. For the non-basmati segment, the expatriate Indian community consumes Indian rice variety, hence no substitute for that, and demand for non-basmati is more inelastic. Which is why the new tariff of 18% will benefit the basmati rice industry more, there will be increased valuation and more price realisation," a Delhi-based trader from a multinational company said.

A trader from Gurgaon said that the reduction of US tariffs on Indian basmati from 50% to 18% will enhance the competitiveness of Indian rice against Pakistan's, enabling India to reclaim its share of the US market.

However, some trade participants are skeptical about any significant impact.

"The reduced 18 % tariff has no [current] effect on Indian basmati. The basmati market, already on fire after the Gulfood surge, remains unchanged," Rajesh Pahariya, chief manager for business development at Kribhco Agri Business, said. "Demand is fixed and limited to the US, driven solely by Indian expatriates, with no re‑exports.. The major buyers this year are Iran, Iraq and Afghanistan."

Platts assessed 1509 Steam rice at $856/mt FOB Jan. 30, $15/mt up week over week, while 1121 steam was assessed at $996/mt FOB, $23/mt high week over week. Meanwhile, Pakistani 1121 Steam Basmati was assessed at $1,098/mt FOB Jan. 30, at more than a $100 premium to the Indian price for the same variety.

Premium Hom Mali rice seen insulated

Thai exporters say distinct market positioning and comparable tariffs will shield premium Hom Mali rice from any fallout linked to Indian export duties.

The US rice market clearly distinguishes between Thai and Indian rice, said Wanniwat Kitireanglarp, deputy secretary general of the Thai Rice Exporters Association, adding that there will be no effect on the Thai rice market.

Market participants stressed that differences in variety, pricing dynamics and consumer preference mean Thai rice exports to the US remain insulated from policy changes affecting India.

"I do not think there will be a huge impact on Thai Mali when the tariff is more or less the same," an exporter from Bangkok said, adding that while Indian basmati and Thai Hom Mali both operate in the premium segment, they are not interchangeable. As long as price levels remain close, exporters do not expect significant changes in shipment volumes to the US.

Minimal impact on Pakistani rice market

Pakistani exporters largely expect the India-US tariff deal to have limited spillover effects on Pakistan's rice exports, as market activity has remained subdued and Pakistan is not a primary supplier to the US.

One exporter said that the market response has been negligible. "So far the impact has been muted; even when the tariffs were first announced, they didn't trigger any noticeable shift, and the final deal has drawn virtually no response from the market."

While exporters acknowledge that any shift in Indian basmati competitiveness could influence basmati trade flows, they do not see it translating into a major opportunity for Pakistan. Another source explained that the impact is constrained because Middle Eastern demand, especially Iran's, for Pakistani basmati could cushion the market.

Another Pakistani exporter said that Pakistan's exposure to the US market is structurally small, limiting direct upside from any tariff-led substitution. "The USA is not a big market for Pakistan as all players are already buying Indian products."

According to S&P Global Energy CERA, India's rice exports are expected to reach 24 million metric tons in the 2025–26 marketing year (October–September), a 5.2% increase compared to the previous year.