India and Pakistan, two of the largest rice-producing nations in the world, are engaged in a high-stakes economic rivalry over Basmati rice exports. Both countries export large quantities of the fragrant long-grain rice variety, which is coveted in global markets for its aroma and quality. The recent lifting of India’s ban on the export of non-Basmati rice has amplified this competition, creating significant challenges for Pakistan, which has been grappling with rising costs and a shrinking share of the market. As the two neighbors vie for dominance in the international rice trade, the implications for global rice markets and the economies of both countries are profound.
In 2023, India imposed a ban on non-Basmati rice exports due to rising inflation and food security concerns. The decision came after erratic weather patterns, particularly a delayed monsoon, led to concerns about lower crop yields. India, being the largest rice exporter globally, took the step to prevent a domestic food crisis by stabilizing rice prices and ensuring sufficient supply for its growing population. With food inflation peaking, and the prices of essential commodities like wheat and pulses increasing, the Indian government opted to prioritize domestic needs over international trade.
The ban sent shockwaves through global rice markets. India, which accounts for around 40% of the world’s rice exports, pulled out a significant portion of global supply, leading to an immediate increase in international rice prices. The price of rice in global markets surged by over 15%, reaching a 15-year high. Countries heavily reliant on Indian rice, particularly in Africa and Asia, faced shortages and were forced to seek alternative suppliers, including Pakistan, Vietnam, and Thailand.
In late 2024, India decided to lift the ban on non-Basmati rice exports, following a better-than-expected harvest driven by favorable monsoon conditions. Pressure from domestic farmers, exporters, and international trade partners also played a role in the decision. The lifting of the ban is expected to bring down global rice prices, but it has also intensified competition between India and Pakistan, particularly in the lucrative Basmati rice segment.
For India, this move is part of a broader strategy to reclaim market share in the global rice trade. During the export ban, many countries turned to other suppliers, with Thailand and Vietnam filling part of the gap left by India’s absence. However, the resumption of India’s rice exports signals its intention to regain its position as the dominant player in the global rice market, putting pressure on Pakistan, which had taken advantage of India’s temporary withdrawal to increase its own exports.
Pakistan, the second-largest exporter of Basmati rice, capitalized on India’s export ban by expanding its share in global markets. The country’s premium Basmati rice, which is known for its aromatic quality and long grains, saw increased demand, especially in markets like the Middle East, Africa, and Europe. Pakistani exporters built new relationships with buyers who had relied on India for non-Basmati varieties and were looking for alternatives during the ban.
However, the lifting of the ban poses significant challenges for Pakistan. With India re-entering the market, Pakistan faces fierce competition, not only in terms of volume but also pricing. Indian rice is typically more affordable due to higher production volumes, better infrastructure, and lower production costs. This puts pressure on Pakistani exporters to lower their prices, which could squeeze profit margins for farmers and exporters already struggling with rising production costs.
Additionally, Pakistan’s rice industry is plagued by issues such as water scarcity, outdated farming techniques, and inconsistent government support. These factors make it difficult for the country to scale up production and compete with India, which benefits from more advanced irrigation systems and larger-scale farming.
In terms of production, India dwarfs Pakistan. India produced approximately 129 million metric tons of rice in 2023, including both Basmati and non-Basmati varieties, while Pakistan produced about 9 million metric tons. Of this, India’s Basmati rice production is around 7 million metric tons, while Pakistan produces about 4.5 million metric tons of Basmati rice annually.
In terms of exports, India is the world’s largest rice exporter, with total rice exports (including Basmati and non-Basmati) valued at around $9.4 billion in 2023. India exported approximately 22 million metric tons of rice that year, with Basmati rice making up a significant portion of this value.
Pakistan, by comparison, exported around 4.1 million metric tons of rice in 2023, valued at approximately $2.3 billion. Basmati rice accounted for the majority of these exports, with key markets in the Middle East, Europe, and Africa.
The average global price for Indian Basmati rice currently hovers around $1,000 per metric ton, while Pakistan’s Basmati rice fetches a slightly higher price, around $1,200 per metric ton, due to its premium quality. However, Pakistani rice faces stiffer competition in non-Basmati segments, where Indian rice is cheaper, with prices ranging from $450 to $600 per metric ton, depending on the quality.
The global market for rice is vast, with demand coming from every continent. Some of the major importers of Basmati rice from India and Pakistan include:
- Middle Eastern countries: Saudi Arabia, the UAE, Iran, and Iraq are the largest buyers of Basmati rice, with a preference for the high-quality aromatic varieties produced by both countries.
- European Union: Countries like the UK and Germany are significant consumers of Basmati rice, with both India and Pakistan having a strong presence in these markets.
- Africa: While traditionally a buyer of non-Basmati rice, African nations like Nigeria and Benin also import Basmati rice from both countries.
- United States and Canada: The North American market is growing for Basmati rice, with demand driven by diaspora communities and health-conscious consumers.
With India re-entering the market, Pakistani exporters will have to contend with India’s ability to offer lower prices and ship larger quantities of rice. This is particularly challenging in price-sensitive markets like Africa, where cost is often the deciding factor for importers.
The lifting of India’s non-Basmati rice export ban is a game-changer in the global rice trade. While it brings relief to international buyers facing high prices, it also puts Pakistan in a difficult position as it struggles to compete with India’s larger production capacity and lower costs. Pakistan’s rice industry will need to innovate, improve farming practices, and reduce production costs to stay competitive in the face of India’s reassertion of dominance in the global rice market.
However, with its premium Basmati rice continuing to be in demand in key markets, Pakistan still has opportunities to retain a strong presence in the high-end segment. Ultimately, the future of this economic war will depend on both countries’ ability to adapt to changing market conditions, improve production efficiency, and maintain strong trade relationships with key importers.
The views expressed in this article are the author’s own and do not necessarily reflect Coverpage’s editorial stance.