Exports of basmati rice and tea to West Asia have stopped due to the US-Israel conflict with Iran, impacting key trade routes like the Strait of Hormuz. Vessels loaded with rice are waiting to depart, and tea exporters face order backlogs.
The halt in exports of key commodities like basmati rice and tea to West Asia due to geopolitical tensions threatens India's foreign exchange earnings and puts pressure on the profitability of exporters. It also highlights the vulnerability of global supply chains to regional conflicts.
Exports of basmati rice and tea from India to West Asia have come to a standstill amid the ongoing conflict involving the US, Israel, and Iran, which has led to concerns over the security of the Strait of Hormuz. Exporters reported that shipments, which had become intermittent since the conflict began in late February, have completely stopped over the past four to six days.
Three vessels loaded with approximately 100,000 tonnes of basmati rice are currently waiting at Kandla Port for the route to reopen. The affected West Asian countries, including Saudi Arabia, Iran, Iraq, UAE, and Yemen, represent a significant portion of India's export market, accounting for about 50% of its basmati rice exports and 46% of its tea exports. India produces around 7.2 million tonnes of basmati rice annually, exporting 6 million tonnes of it.
Tea exporters are facing a backlog of orders for premium second flush orthodox teas from Gulf Cooperation Council (GCC) countries. While some small consignments are being rerouted through Turkey, the primary shipping route remains inaccessible. The attack on the Indian-flagged cargo vessel MT Marivex off the coast of Oman near the Strait of Hormuz has heightened tensions and caution among exporters and shipping lines, impacting profitability due to shipment uncertainties. Typically, buyers from the region place orders for orthodox teas by the end of May, with shipments commencing in June.
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