India’s rice exports: What’s fuelling the dominance?
India has maintained its dominance in rice exports this year, as it retains its competitive advantages despite a temporary export ban. In this analysis, TPCI’s research team takes a closer look at the factors driving India’s export growth in rice, challenges as well as the major markets that still have untapped potential.
- In 2021, global rice exports were recorded at US$ 27.13 billion, led by India (US$ 9.6 billion), Thailand (US$ 3.3 billion) and Vietnam (US$ 3 billion).
- High domestic stocks and low local prices have allowed India to offer rice at deep discounts over the past few years, which have also helped poor nations.
- Unlike its dominance in overall rice exports, India ranks low in husked (brown) rice, although exports in 2021 grew by a strong 40% YoY to reach US$ 15.3 million.
- India’s market share is dominant in 3 of the top five rice importers, while it lags in the case of the US (22%) and Philippines (3.8%).
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Rice (scientifically named Oryza) is a major staple in more than 100 countries and is produced all around the globe. The global market for rice is estimated to reach US$ 356 billion by 2030, growing at a CAGR of 2.6% during 2023-30. Global consumption of rice has seen a slight increase over the past several years. In the 2021/22 crop year, about 520 million metric tonnes of rice were consumed worldwide, up from 437.18 million metric tons in the 2008/09 crop year. Around 500 million tonnes of rice is produced worldwide, whereas only 10% is traded internationally on an average.
In 2021, global rice exports were recorded at US$ 27.13 billion, led by India (US$ 9.6 billion), Thailand (US$ 3.3 billion) and Vietnam (US$ 3 billion). As the largest exporter, India has witnessed a CAGR of 14% in quantity exports over 2017-21 and 7% in value terms. India’s rice exports touched a record high of 21.5 MT in 2021, more than the combined shipments of next 4 biggest exporting countries – Thailand, Vietnam, Pakistan and US.
High domestic stocks and low local prices have allowed India to offer rice at deep discounts over the past few years, which have also helped poor nations. Any hindrance in Indian rice supply hits almost every importing country due to comparative cost advantage (Thailand and Vietnam prices are already 30% more expensive) as compared to Indian rice exports.
Production and market trends
India is also the second largest producer of rice in the world. The major rice cultivation season in India is the Kharif season, which entails sowing the crop during June-July and harvesting it during November-December. As rice is a water intensive crop, it needs a hot and humid climate.
Rice is grown in almost every state of the country. Top rice producing states are West Bengal, UP, Punjab, Telangana and Tamil Nadu. A perusal of Indian meteorological department’s data illustrates that UP, Jharkhand, Punjab and Bihar have experienced deficient rainfall in 2022 monsoon season, thereby indicating a potentially lower produce this year.
Top 10 rice producing states in India 2021-22
|Rank in production||State/Union Territory||Rice production
2021-22 (‘000 tonnes)
Source: Ministry of Agriculture & Farmer’s Welfare, RBI
Source: ITC Trade Map
Bangladesh was the biggest importer of rice from India during 2017-21, growing at a CAGR of 25% during the period. It is followed by Saudi Arabia (CAGR of 1%), Iran (negative CAGR of 7%), Iraq (CAGR of 2%) and Benin (CAGR of 9%).
India exported Basmati Rice worth US$ 3.33 billion in Apr-Dec, 2022-23, with Iran (US$ 776.78 million), Saudi Arabia (US$ 666.91 million) and UAE (US$ 236.13 million) emerging as top export markets.
Under non-basmati rice exports, Rice (parboiled) led India’s exports with a value of US$ 2.12 billion during Apr-Dec 2022-23, growing by 0.4% YoY. Top markets were Benin, Cote D Ivore and Bangladesh. Total exports of non-basmati from India was recorded at US$ 4.66 billion during the period, growing by 3.34% YoY.
Source: Ministry of Commerce and Industry
Current issues and challenges
In September 2022, India imposed a ban on export of organic non-basmati rice, including broken rice to moderate the domestic prices of the commodity. Additionally it mandated an export duty of 20% on rice in husk (paddy or rough), husked (brown rice) and semi-milled or wholly milled rice.
In the ongoing year, because of supply constraints, there has been an uptick in the procurement of rice. Moreover, buyers are absorbing the export duty, despite which Indian rice is cheaper than rice from Thailand. The ban was lifted in November 2022 after easing of supplies moderated prices.
There are, however critical hindrances in export of rice from India to some markets because of Minimum Residue Limits. These are defined as safe limits pertaining to the maximum expected level of a pesticide (or any other agricultural chemical) on a food commodity after it is safe and authorized to use. It may be noted that these limits are food product and market specific. They serve as monitoring tools to prevent illegal and/or excessive use of a pesticide and ensure compliance with the registered label. Global differences in regulations cause trade issues, especially when countries change regulations unexpectedly. Indian rice exporters also talk about the red tape that hinders exports like change of custom rules in importing countries, or price change.
Unlike its dominance in overall rice exports, India ranks low in husked (brown) rice, although exports in 2021 grew by a strong 40% YoY to reach US$ 15.3 million. India ranked 18th in global exports for this category in 2021, where the leading exporters are Pakistan (US$ 328 million), China (US$ 194.9 million) and the US (US$ 136.2 million).
Vinod Kumar Kaul, ED, All India Rice Exporters Association, comments, “Brown rice is imported primarily by EU. Then they process it in their mills. If we export white rice to EU, importers have to pay € 175/ton as duty. EU has less production of rice, limited to few member states like Spain and Italy. Therefore, they import brown rice and process it locally. Some brown basmati rice from India gets 0% duty. Middle East region imports 80% of India’s basmati rice but the demand there is for par boiled rice because of their cuisine preferences like basmati biryani.” Demand for brown rice is also not very strong in other key markets like Africa and US.” He also feels that exporting brown rice is not advisable as it commands a bare minimum price and processing margins go to another country.
India’s rice exports registered a CAGR of 8% between 2017 and 2021. Among other top exporters, Thailand showed a negative CAGR of 10%, Vietnam, Pakistan and US showed CAGRs of 3%, 5% and 3% respectively. This depicts that Indian rice exports are growing at an accelerating rate and have a promising future.
Source: ITC Trade Map
China has the biggest share in imports of rice from the world with a CAGR of 5% between 2017 and 2021, followed by Philippines (44%), Saudi Arabia (2%), US (9%) and Bangladesh (6%).
Source: ITC Trade Map
Out of these top five markets, India has a dominant presence in rice imports of Bangladesh (92%); Saudi Arabia (77%) and Iran (53%). However it’s share in US imports of rice is relatively low at 22%. In comparison, Thailand dominates the US rice import market with a share of 59.6%.
The other market where India has a weak presence among the top 5 is Philippines, with a share of just 3.8% and a rank of 5. Philippines is a potential market for exports as it has shown a growth of 36% per annum in imported value during 2017-21. The top players in the market currently are Vietnam, Myanmar and Thailand, with shares of 80%, 5.8% and 4.8% respectively. Therefore, India can explore the potential of these markets more deeply for a possible uptick in its share.
Well while one should give due credit for the well-researched piece, the suggestion to push India’s rice exports to the US and the Philippines is easier said than done. First, the logistics cost and the second is to adhere to the sanitary standards.