Why the numbers show tariff relief could change the trajectory—not just sentiment

The proposed reduction of US tariffs on Indian rice imports to 18 per cent, from levels that had climbed as high as 50 per cent , has rekindled optimism across India’s rice export ecosystem. Yet the significance of this move extends well beyond immediate relief.

Trade data from the tariff shock period itself reveals a market that remained resilient in volumes but suffered meaningful economic distortion in pricing and margins. The proposed tariff reset, therefore, has the potential to structurally alter trade dynamics—particularly for basmati rice—rather than merely lift sentiment.

What the Tariff Shock Did—and Did Not Do

Despite sharply higher tariffs, Indian rice exports to the United States did not collapse. During FY 2024–25, India exported 335,554 metric tonnes of rice to the US across basmati and non-basmati categories. Basmati alone accounted for 274,213 MT, generating export earnings of Rs 2,849.16 crore ($ 337.10 million) at an average realization of $ 1,229 per tonne. Non-basmati shipments stood at 61,341 MT, valued at $ 54.64 million, reaffirming the US market’s orientation toward value rather than bulk volumes.

This performance under high-tariff conditions underscores a critical point: US demand for Indian rice—especially basmati—is structurally resilient. Consumption is anchored in ethnic demand, premium retail positioning, and foodservice usage, which limited demand destruction even as duties escalated. However, while volumes held, the economic burden of tariffs manifested elsewhere.

Price Compression: The Real Impact of Elevated Tariffs

The full effect of tariff escalation becomes clearer when examining exports between April and November 2025, a period entirely exposed to elevated reciprocal duties. During this time, basmati exports declined to 199,558 MT, with export earnings falling to Rs 1,749.17 crore ($ 201.13 million). Average realizations dropped sharply to $ 1,007.86 per tonne, compared with $ 1,229 per tonne in FY 2024–25.

Non-basmati rice faced even steeper pressure. Exports of 40,960 MT earned $ 32.71 million, with average prices declining to $ 798.50 per tonne. These figures point to a clear conclusion: the tariff did not deter US buyers as much as it forced Indian exporters to absorb cost increases through price concessions, eroding margins across the supply chain.

Monthly Trends Show Resilience—but at a Cost

A month-wise comparison between September–November 2025 (according to IREF data ) and the same period in 2024, following the jump from a 10 per cent tariff to nearly 50 per cent, highlights this imbalance further. In September 2025, export volumes rose marginally to 22,668 MT from 21,329 MT a year earlier, yet export value dropped sharply from $ 27.12 million to $ 22.28 million. October 2025 saw volumes increase to 29,015 MT from 22,606 MT, while export value remained flat at approximately $ 28.19 million, indicating a steep fall in unit realization. November followed the same pattern, with higher volumes but lower value.

Collectively, these trends reveal a market that remained accessible but increasingly uneconomic, with exporters prioritizing continuity over profitability.

Why the 18 per cent Tariff Matters Strategically

The proposed tariff reduction to 18 per cent is not just incremental relief; it represents a return to competitive parity with other rice-exporting origins. At current price levels, this reduction could restore $ 150–200 per tonne in effective margins, particularly in premium basmati segments.

Industry leaders view this as a structural inflection point rather than a temporary reprieve.

Akshay Gupta, Head – Bulk Exports, KRBL, notes that the announcement of the US–India bilateral trade deal is “An important and encouraging development for India’s agricultural export sector, particularly for the basmati rice industry.” He emphasizes that the reduction in reciprocal tariffs from 25 per cent to 18 per cent, effective immediately, is expected to ease export-related cost pressures and restore pricing competitiveness.

Gupta further highlights that predictable, rules-based trade frameworks are essential for high-value agricultural exports, as they enable better value realization across the supply chain and ultimately deliver improved outcomes for farmers. From an industry standpoint, he adds, the removal of the additional 25 per cent duty linked to geopolitical considerations is a meaningful step toward normalizing trade flows.

Implications for India’s Export Strategy

While the US is not India’s largest rice export destination by volume, it is among the most important by value realization. Basmati exports to the US consistently command higher prices than shipments to many West Asian or African markets. Tariff normalization therefore improves not only export volumes but also the quality of export earnings, strengthening incentives for compliance, branding, and traceability investments.

With India currently carrying ample rice stocks, improved access to a high-value market like the US could help exporters rebalance portfolios away from purely volume-driven destinations and toward markets that reward differentiation and consistency.

Risks That Still Remain

Tariff relief alone will not guarantee sustained growth. Freight volatility, currency movements, and evolving US food safety and traceability requirements will continue to influence competitiveness. Exporters will also seek clarity on the durability and legal certainty of the tariff regime, as contracting decisions are typically made months in advance.

That said, historical data suggests that once tariff friction is reduced, the immediate benefit is not explosive volume growth, but the restoration of pricing discipline and margin stability.

Conclusion: From Survival to Strategic Expansion

The proposed US tariff cut to 18 per cent marks a transition from a phase of export survival to strategic recalibration. The data from FY 2024–25 and 2025 demonstrates that Indian rice exporters withstood the tariff shock, but at a tangible cost in realizations and profitability.

By restoring tariff parity and predictability, the US–India trade move creates the conditions for Indian exporters—particularly in basmati rice—to reclaim value, deepen market presence, and plan long-term. As Akshay Gupta observes, such initiatives will reinforce India’s standing as a trusted global food partner, support rural prosperity, and drive sustained growth across the agricultural economy.

— Suchetana Choudhury (suchetana.choudhuri@agrospectrumindia.com)