US-Iran tensions lift Indian rice prices as global buyers stockpile supplies

Rice prices in India have risen as geopolitical tensions between the U.S. and Iran drive global demand for food reserves. The price increase varies by variety: Basmati rice rose by 15-20%, while standard varieties increased by 20-25%. The surge is attributed to a domestic supply shortage caused by a shift toward exports amid global instability. Market participants expect prices to remain high until October or November, when the new harvest is scheduled for collection. Traders warn that further escalation of the conflict or disruptions to logistics could prolong the period of elevated prices.

Rice, a staple on Indian plates, is getting pricier as the US-Iran war drives countries to lock in food supplies, pushing up global demand. Basmati prices have risen 15–20% in the first quarter of FY27 from a year earlier, while non-basmati varieties are up 20–25%, squeezed by stronger overseas demand and deficient rains in southern India.Prices are likely to stay high until the new crop arrives in October-November, leaving consumers with little chance of near-term relief.“Globally, all the countries are trying to secure their food supply. Rice being one of the major staples, they are buying aggressively. The Gulf countries are buying huge quantities of rice from India,” said Suraj Agarwal, CEO of RiceVilla group, a rice exporting and marketing firm saidThe surge in demand has pushed basmati rice, widely used in biryani, to around Rs 100 per kg in the first quarter of FY27, from Rs 85 per kg in the same period last year. The increase has also extended to non-basmati varieties, putting pressure on household budgets.Sona Masoori rice, which was priced at Rs 51-52 per kg last year, has risen to Rs 63-64 per kg. Agarwal said prices are unlikely to ease in the near term as the market is stretched between strong demand and limited fresh supplies.“Prices are unlikely to come down any time soon. The US-Iran truce treaty is yet to happen, and the arrival of the kharif crop is almost two to three months away,” Agarwal said.The export market continues to provide strong support to basmati prices. Akshay Gupta, head of bulk rice exports, KRBL Limited, said the demand for Indian basmati remains strong, with India shipping a record 6.52 million tonnes in FY26 to 154 countries.Saudi Arabia remains the largest buyer, while enquiries from West Asia continue to be high. However, payment and shipping disruptions along the Gulf corridor have slowed shipments, creating a backlog of demand rather than weakening buying interest.“The 2025 crop moved faster than anyone expected and there is very little carry-out going into the October arrivals. Domestic prices are being set by that tightness, not by exports,” Gupta said.The domestic market is also facing pressure from government procurement and uneven rainfall. BV Krishna Rao, president of the Rice Exporters Association, said government buying for public distribution has contributed to the price rise.“In Telangana, the government is distributing non-basmati rice through PDS. Also, lesser rains in Andhra Pradesh, Karnataka and Telangana have kept the prices firm,” Rao said.With the next kharif crop still weeks away, traders expect prices to remain elevated through the immediate term. Any meaningful correction is likely to depend on fresh crop arrivals, improvement in rainfall and a moderation in overseas buying. Until then, consumers are likely to bear the brunt of higher rice prices.