Basmati rice exporters experienced significant stock price declines on Monday, January 12, as the Iranian currency crisis severely disrupted export operations to one of India's largest rice markets. The sector faced renewed uncertainty following the steep depreciation of the Iranian rial and the withdrawal of government subsidies on food imports.

Stock Performance Impact

The basmati rice sector witnessed broad-based selling pressure, with major exporters recording notable declines:

Kohinoor Foods emerged as the biggest laggard among basmati rice stocks, while other major players including LT Foods and KRBL also faced downward pressure during the trading session.

Iranian Market Crisis Details

The export disruption stems from severe currency depreciation and policy changes in Iran, India's second-largest basmati rice market. The Iranian rial has weakened dramatically from approximately 90,000 per US dollar before the Iran-Israel conflict to about 150,000 rial per dollar currently, representing a significant devaluation that has made imports substantially more expensive.

The Iranian government's decision to withdraw subsidies on food imports, combined with stricter US sanctions, has forced Indian exporters to suspend shipments, leaving substantial cargo stranded at international ports awaiting clearance.

Market Significance and Scale

Iran represents a crucial market for Indian basmati rice exporters, ranking as the second-largest importer after Saudi Arabia. The country demonstrates strong preference for the sela (parboiled) variety and maintains substantial import volumes:

• Annual Import Volume: 12 lakh tonnes
• Estimated Annual Value: ₹12,000 crores
• Current Stranded Shipments: ₹2,000 crores

The scale of disruption highlights the significant exposure Indian exporters have to the Iranian market and the immediate financial impact of geopolitical tensions.

Analyst Perspectives and Market Outlook

Market analysts emphasize the dual challenges facing basmati rice exporters. Prashanth Tapse, Research Analyst and Sr VP - Research at Mehta Equities, noted that Indian basmati exporters are contending with prospect of US trade tariffs threatening core export volumes alongside weakening demand from Iran due to geopolitical tensions. These developments could exacerbate near-term business risk, potentially compressing margins and weighing on earnings visibility for exporters with significant overseas exposure.

Companies with substantial export revenue exposure face the most immediate impact, with market leaders such as LT Foods and KRBL having export revenues comprising 25-45% of total sales. This high exposure level positions these companies to experience direct effects from the Iranian market disruption and potential US trade policy changes.

The combination of Iranian currency crisis and potential US tariff threats creates a challenging operating environment for basmati rice exporters, with analysts highlighting increased business risk and margin pressure concerns for the sector.

India's rice exports experienced a dramatic recovery in 2025, surging 19.4% as the government's decision to lift export restrictions restored the country's competitive edge in global markets. The world's largest rice exporter shipped 21.55 million metric tons during the year, marking the second-highest export level in India's history and approaching the 2022 record of 22.3 million tons.

Export Restrictions Removal Drives Recovery

The export surge followed the Centre's decision in March to remove the final set of export limits that had been imposed in 2022 and 2023. According to government officials, the restrictions were lifted due to record domestic production and improved supply conditions. "Indian shipments rebounded quickly after the government lifted export restrictions in March," a government official told Reuters.

The removal of these curbs made Indian rice significantly more competitive in international markets, with lower prices helping the country regain market share lost during the restriction period.

Strong Performance Across Rice Categories

The export growth was broad-based, with both major rice categories showing robust performance:

Basmati rice exports reached a record high of 6.4 million tons, while non-basmati rice shipments experienced particularly strong growth at 25%.

Key Market Destinations and Global Impact

India's export recovery significantly impacted global rice trade dynamics. Non-basmati rice exports increased sharply to several key markets including Bangladesh, Benin, Cameroon, Ivory Coast, and Djibouti. Meanwhile, premium basmati rice saw increased demand from Iran, the United Arab Emirates, and Britain.

The surge in Indian rice exports had broader implications for the global market, pushing rice prices in Asia to their lowest point in nearly a decade. This price decline made rice more affordable for low-income consumers in Africa and other regions, while simultaneously curbing shipments from competing exporters such as Thailand and Vietnam.

Market Competitiveness and Industry Outlook

India's dominant position in global rice trade was reinforced by the 2025 performance. The country typically exports more rice than the next three biggest exporters—Thailand, Vietnam, and Pakistan—combined. Industry experts highlighted the competitive advantage gained through the policy changes.

"Indian rice is very competitive compared with supplies from other exporting countries, with lower prices helping India regain lost market share," said Nitin Gupta, senior vice president at Olam Agri India, speaking at the India International Rice Summit. The combination of competitive pricing and reliable supply has positioned India to maintain its leadership in global rice markets.