KRBL Reduces Iran Exposure as US Tariff Threat Pressures Basmati Rice Prices
KRBL has dramatically reduced its Iran exposure from $100 million in 2018 to $8-10 million currently amid US threats of 25% tariffs on countries trading with Iran. Despite challenges, Iran remains India's second-largest basmati rice market with exports worth $470 million between April-November 2024. The tariff threat has already caused basmati prices to drop from ₹80 to ₹75 per kg, while over ₹2,000 crore in payments remain stuck in Iran due to internal disruptions.
*this image is generated using AI for illustrative purposes only.
Indian basmati rice exporters are grappling with fresh uncertainty as US President Donald Trump threatens 25% tariffs on countries conducting business with Iran. KRBL , a major basmati rice exporter, has revealed its significantly reduced exposure to the Iranian market while highlighting ongoing industry challenges.
Sharp Reduction in Iran Business
KRBL's Iran-related business has contracted dramatically over recent years due to sanctions and market uncertainties. Akshay Gupta, Business Head – Bulk Exports at KRBL, disclosed the company's current position compared to its historical exposure.
| Parameter: | 2018 | Current |
|---|---|---|
| Trade Volume: | 250,000 tonnes | Significantly reduced |
| Business Value: | $100 million | $8-10 million |
| Trade Route: | Direct | Via UAE trading companies |
Most of KRBL's remaining Iran-linked trade now flows through the United Arab Emirates, where Iranian importers operate trading companies to facilitate transactions.
Iran Remains Key Market Despite Challenges
Despite the risks, Iran continues to represent a crucial market for Indian basmati rice exports. Dev Garg, Vice President at the Indian Rice Exporters Federation (IREF), emphasized Iran's consistent position as India's second-largest rice market.
India's rice exports to Iran demonstrate the market's significance:
| Period: | Volume | Value |
|---|---|---|
| April-November 2024: | 600,000 metric tonnes | $470 million |
| Full Year 2023: | 855,000 metric tonnes | $880 million |
According to IREF data, more than 99% of rice exported to Iran consists of basmati varieties, underscoring the specialized nature of this trade relationship.
Immediate Market Impact
The US tariff threat has already triggered immediate consequences in domestic basmati markets. Price volatility emerged swiftly following Trump's announcement, affecting exporters and traders across India.
| Metric: | Before Announcement | After Announcement |
|---|---|---|
| Basmati Price: | ₹80.00 per kg | ₹75.00 per kg |
| Price Drop: | - | ₹5.00 per kg |
Payment Disruptions Compound Challenges
Beyond pricing pressures, Indian exporters face significant payment delays from Iranian buyers. Internal disruptions within Iran, including protests and currency weakness, have severely affected the payment system. Industry sources report that payments worth over ₹2,000 crore remain stuck in Iran due to disruptions in central trading areas and the weakening Iranian currency.
Gupta noted that these internal Iranian disruptions have begun affecting the payment system, creating additional uncertainty for exporters who have maintained business relationships in the region. The combination of geopolitical tensions, payment delays, and currency instability presents a complex challenge for Indian basmati exporters navigating this crucial but volatile market.
Historical Stock Returns for KRBL
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.50% | -5.92% | -7.15% | -6.79% | +33.24% | +47.55% |
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