Indian households are facing steeper grocery bills as rice prices, a staple food, have seen sharp increases across both Basmati and non-Basmati varieties. Reports indicate that Basmati rice prices have climbed by 15-20%, while non-Basmati rates have risen by 20-25% in the first quarter of FY27 compared to the previous year.
This surge is attributed to a combination of factors: heightened global demand from Gulf nations stockpiling food supplies amidst the ongoing US-Iran conflict, and significant domestic supply pressures caused by deficient rainfall in southern India.
Global Conflict Fuels Demand
The US-Iran war has prompted countries worldwide to prioritize food security, leading to aggressive purchasing, particularly of staples like rice. Suraj Agarwal, CEO of RiceVilla group, noted that Gulf countries are buying substantial quantities of rice from India. This increased demand has pushed Basmati rice, a popular choice for dishes like biryani, to approximately Rs 100 per kg, up from Rs 85 per kg last year.
The price hike is not limited to premium Basmati. Non-Basmati varieties have also seen considerable increases. Sona Masoori rice, for example, which was priced around Rs 51-52 per kg last year, now costs Rs 63-64 per kg. Agarwal cautioned that prices are unlikely to ease soon, citing the unresolved US-Iran truce and the two to three months remaining until the arrival of the new kharif crop.
Domestic Pressures and Export Strength
Despite the domestic price increases, the export market for Indian Basmati remains robust. Akshay Gupta, head of bulk rice exports at KRBL Limited, confirmed strong international demand, with India exporting a record 6.52 million tonnes to 154 countries in FY26. Saudi Arabia continues to be the largest buyer, and inquiries from West Asia remain high. However, payment and shipping disruptions along the Gulf corridor have created a backlog rather than diminishing buying interest.
Gupta added that the 2025 crop was consumed faster than anticipated, leading to tight supplies ahead of the October arrivals, which is a major factor driving current domestic prices. Domestically, government procurement for public distribution systems has also contributed to the price surge, according to BV Krishna Rao, president of the Rice Exporters Association. Lower rainfall in key southern states like Andhra Pradesh, Karnataka, and Telangana has further tightened supplies, keeping prices firm.
Outlook: No Immediate Relief Expected
Traders and exporters anticipate that rice prices will remain elevated in the immediate future, with little hope for relief until the new crop arrives in October-November. Any significant correction will likely depend on fresh crop arrivals, improved rainfall patterns, and a moderation in overseas buying. Until then, consumers are expected to continue bearing the brunt of higher rice costs.