The global trade industry is witnessing fierce turmoil with rapidly shifting dynamics in the reciprocal tariffs imposed by the US administration. If you are in the trade industry, you already know how things unfolded with the implementation of 10% baseline tariffs and varying degrees of reciprocal tariffs on countries (excluding Mexico and Canada) across the globe.

However, the White House on Wednesday announced a 90-day pause on the new tariff policy (excluding China) and expressed willingness to engage in dialogue with other nations.

Amid all this turbulence, the bigger question is, what lies ahead for Indian rice exporters? We will try to dive into this in detail in this informative piece of article. We will discuss the challenges and opportunities that lie ahead. So, let us get started.

India’s Current Rice Trade Dynamics With the US

India is the second-largest exporter of rice to the US after Thailand. In 2023, India exported 289,040 metric tonnes of rice to the US, trailing behind Thailand, which exported 756,299 metric tonnes in the same year. This highlights India's strong foothold in the US rice market. At the same time, it underscores that Thailand exports 161.7% more rice to the US than India. In terms of volume, the US typically accounts for about 4.6% of India’s total basmati rice exports annually based on the calculation made through data available on India’s Export of Basmati Rice In The 2023-24. 

INDIA’S EXPORT OF BASMATI RICE IN THE 2023-24 FISCAL YEAR (APRIL-MARCH)

TOP 10 IMPORTING COUNTRIES	QUANTITY IN METRIC TONNES	VALUE IN RS CRORE	VALUE IN $ BILLION
SAUDI ARABIA	10,98,039	10391.12	1.25
IRAQ	8,24,779	7349.53	0.89
IRAN	6,70,781	5626.27	0.68
YEMEN REPUBLIC	3,07,121	2837.92	0.34
UNITED ARAB EMIRATES	3,08,663	2766.55	0.33
UNITED STATES OF AMERICA	2,34,473	2526.71	0.3
UNITED KINGDOM	1,85,566	1817.36	0.22
KUWAIT	1,79,585	1671.16	0.2
OMAN	1,64,353	1504.54	0.18
QATAR	1,15,405	1031.19	0.12
OVERALL	52,42,511	48389.21	5.84

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS), Kolkata

Thailand is one of the top suppliers of Jasmine rice to the US, just as Basmati rice accounts for a major chunk of India’s rice exports to the US. Although there is a wide percentage gap, both Jasmine and Basmati rice command substantial demand in the US market under the aromatic rice category.

Challenges for Indian Basmati Rice Exporters in the US Market

From consumer perception to geographical proximity, agro commodity trade depends on several dynamics. Each factor combines and determines the demand in the market. Here are some challenges for Indian basmati rice exporters. 

Consumer Perception:

Consumers in the US have a common perception that Jasmine rice is more premium than Basmati rice. This impression can be attributed to exceptional branding efforts by Thailand over the past decades. This fragrant rice, which subtly mimics the scent of the Jasmine flower, enjoys greater prominence on retail shelves across the US, making it challenging for Indian Basmati rice exporters to match its perceived supremacy.

Geographical Proximity: 

Quality isn’t the sole determinant of trade dynamics; geographical proximity also holds significant sway, and nations do factor in freight expenditures. Thailand is generally marginally closer to the US owing to its strategic positioning along the Pacific-facing corridor of Asia. This locational advantage gives Jasmine rice  a preferred procurement option for rice importers in the US. India Thailand witnesses heavier reciprocal tariff, than Indian could have a bigger space as a rice supplier. However, the geographical proximity will still remain a critical factor.

Cultural Preference:

Basmati rice has been traditionally liked in South East Asian countries and the Middle East. Most Gulf countries include it as a staple in their daily cuisine and in dishes prepared during festive occasions. Basmati rice, however, has not cultivated the same cultural affinity in the US. The demand remains considerable, though it still falls short when compared to that of Jasmine rice.

Marketing Gap:

It is not at all surprising thatThailand has been consistent in its marketing and branding initiatives and has cultivated a robust network with major importers, B2B food enterprises, and supermarket chains. This impressively well-established ecosystem provides them with a competitive edge and enables swift distribution across the length and breadth of the nation. They are better positioned to assess market demand, engage in effective negotiations with buyers, and fulfill orders promptly. India, by contrast, lags slightly in this regard and continues to depend on a fragmented network of industry middlemen.

Opportunities for Indian Basmati Rice Exporters in the US Market

Established Market:

When it comes to the positive aspects for Indian Basmati rice exporters, the US already possesses a well-established market for the aromatic rice category. This means the challenge is not market creation, but awareness. A structured approach to expanding in the vast US rice market is essential. An approach that positions these fluffy, long-grain varieties as premium.

Retail Shelf Space is Already Shared:

Basmati rice is already visible in major retail chains like Costco, Walmart, and Kroger, sharing shelf space with Jasmine Rice. It’s a recognizable category, unlike other niche grains. Indian medium to big  rice brands have an opportunity to establish differentiation through thoughtful packaging and strategic communication. An approach that enables Indian Basmati rice to stand out in the market and be positioned as a premium category.

A Healthier Option: 

The market for healthier food alternatives is continually expanding. Basmati rice is believed to possess a naturally lower glycemic index compared to Jasmine rice, aligning with the objectives of low-calorie diets aimed at managing obesity. A systematic yet nuanced positioning as a healthier choice can unlock significant opportunities for Indian exporters. However, it’s a steady process. 

Diverse Varieties of Rice:

Indian Basmati rice offers a broader range of varieties compared to Jasmine rice. While the former boasts more than 7 to 8 distinct types, the latter includes only three—Thai Hom Mali 105 (KDML 105), RD15, and RD6 (used for sticky Jasmine rice). This extensive diversity provides Indian exporters with a competitive advantage and offers consumers a wider array of choices. Each variety possesses its own unique characteristics and is ideally suited to different culinary applications.

The underlying challenge of reciprocal tariffs

As the reciprocal tariffs remain subject to decisions by the US administration, they will play a pivotal role in shaping the future of rice trade. Dialogues are currently underway, and the US, to a significant extent, is expected to seek a resolution that maintains trade equilibrium without disrupting existing trade dynamics. However, most agricultural economists and diplomats remain optimistic and believe that such tariff developments are unlikely to negatively affect Indo-US trade relations, and things are expected to progress smoothly.

Conclusion: 

Despite ongoing uncertainties surrounding reciprocal tariffs, Indian Basmati rice exporters have a strong foothold in the US market. With diverse varieties, retail presence, and strategic branding efforts, they can effectively differentiate their offerings and expand market share. Proactive engagement and sustained promotion will be key to long-term growth in this competitive landscape.