Basmati rice, a staple for many, has seen its prices cross the Rs 100 per kilogram mark in recent months. According to industry reports, basmati varieties experienced a 15-20% price jump in the first quarter of fiscal year 2027 compared to the previous year. Non-basmati rice also saw a substantial increase of 20-25%.
Key Drivers Behind the Basmati Rice Price Hike
Akshay Gupta, head of bulk exports at KRBL, identified two primary factors contributing to the sharp increase in basmati rice prices: a reduced crop yield and a dramatic surge in international demand.
Reduced Domestic Crop
The price escalation for basmati began as early as January, following a shorter-than-expected crop from October to December 2025. Early floods in Punjab and Haryana significantly disrupted cultivation, leading to an overall quantity that fell short of market requirements.
Skyrocketing International Demand
The second major factor is the unexpected spike in demand from overseas buyers, which began in late February and early March. Geopolitical tensions in West Asia fueled a rush for food security, causing international buyers to stockpile. Saudi Arabia remains India's largest buyer, with strong interest from other Gulf nations. India exported a record 6.52 million tonnes of basmati rice to 154 countries in FY26.
Will Elevated Basmati Rice Prices Continue?
Industry experts, including Gupta, anticipate that the current high price trend for basmati rice will persist. The new basmati crop has just started arriving, but initial prices are already approximately 20% higher than last year's opening levels for the 1509 paddy crop. This bullish signal, combined with unwavering international demand, suggests prices will remain elevated. There are no clear indications of a weakening in global demand, despite higher freight costs and exchange rates.
Regarding the upcoming festive season, while the new crop is still stabilizing, the early arrival prices serve as the best current indicator, pointing towards a market that will remain higher than the previous year.
Shifting Export Routes and Market Dynamics
Strong global demand is also reshaping how Indian rice reaches overseas markets. Shipments to countries like Jordan and Turkey have seen an eight-fold increase. However, this surge doesn't necessarily mean these countries have become major direct consumers. Gupta explained that the rise in exports to Jordan is largely due to the disruption around the Strait of Hormuz, with shipments being rerouted to fulfill demand in Iraq, where direct exports have fallen by about 50%. This reflects a strategic diversification by buyers and exporters to mitigate regional disruptions.
While some of this new demand could stabilize even after current disruptions subside, the unusually high demand seen in the previous year, partly driven by competitive Indian pricing (average $870/tonne), may not fully repeat. The pricing strategy of Pakistan, another major basmati exporter, will also play a crucial role. If Pakistani basmati becomes more competitive, it could shift some market share. The full picture is expected to become clearer by mid-November.