Red Sea Unrest Could Increase Prices for Indian Basmati Exports; Government Optimistic About Maintaining Demand


Published on: December 23, 2023.

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In recent times, there have been a series of attacks on ships by Yemen’s Houthi rebels in the Red Sea, and this could potentially impact India’s export industry. Specifically, basmati rice exports from India to Western countries may face challenges if the situation in the Red Sea continues to be volatile.

Government sources have indicated that if the conflict persists, India may need to take a longer shipping route around Africa to export basmati rice. This alternative route could lead to a significant increase in costs, potentially ranging from 15% to 20%.

Despite these possible obstacles, the Indian government remains hopeful that the increase in prices of basmati rice will not negatively affect the overall demand. It is worth noting that basmati rice exports from India have been growing steadily, with a 20% year-on-year increase recorded between April 1 and December 8, 2023.

Although trade restrictions on essential commodities like wheat, rice, and sugar are expected to reduce India’s exports by $4 to $5 billion in the current financial year, the country is actively seeking to expand its global market share in the export of fresh fruits. Currently, Latin American countries hold a significant portion of this market, but India aims to increase its presence.

The non-controlled agriculture sector has experienced an overall export growth of 4.23%. To capitalize on this, India has developed a sea export protocol for the harvest and storage of fresh fruits, aiming to increase the volume of exports in this sector.

Between April and November 2023, exports of fruits and vegetables saw a year-on-year growth of 15.10%. In the coming years, the Indian government plans to elevate the export of bananas from its current value of $174 million to over $1 billion annually. Additionally, efforts are underway to export pomegranates and mangoes to the United States using the new sea export protocol, thus avoiding spoilage.

As the situation in the Red Sea continues to unfold, it is crucial for India to closely monitor the developments and devise strategies to mitigate any potential impact on its export industry.

**Source:** [CNBCTV18](https://www.cnbctv18.com){:target=”_blank” rel=”nofollow”}