Chandigarh: A steep 26% import tariff imposed by the US on Indian basmati rice has sent ripples through Punjab's rice industry, threatening to slash exporter margins, destabilize procurement prices for farmers, and shift American buyers toward cheaper alternatives such as Pakistan. The sudden hike, announced as part of a broader protectionist policy shift under US President Donald Trump's new trade doctrine, has placed India's flagship rice export in jeopardy. Exporters now fear a cascading impact that could squeeze the entire value chain — from field to shipping dock.
"The US market cannot absorb this overnight increase," said Ranjit Singh Jossan, vice-president of The Basmati Rice Miller and Exporter Association. "Sales have frozen effectively. Ongoing deals are on hold, and exporters are being forced to redirect shipments to other countries for lower prices." India exported 3.08 lakh metric tonnes of basmati rice to the US in the financial year 2023–24, a slight dip from 3.15 LMT in 2022–23. While India's total basmati exports rose to 59.42 LMT in 2024–25 from 52.42 LMT the previous year, US-bound shipments have been declining already — a trend the new tariff is likely to accelerate.
Jossan warned that reduced US demand could force exporters to slash procurement prices, hurting farmers across Punjab, where basmati is a high-value cash crop. "This is not just about trade — it's about rural livelihoods," he said. Exporters were grappling with logistical disruptions in the Red Sea and uncertainty stemming from US-Iran tensions already when many shipments headed to American ports now face an unclear fate under the new duties.
A rice exporter from Amritsar expressed concerns, stating, "We're staring at reduced export earnings, falling prices at home, and a system-wide shock to Indian agriculture." The tariff hike is part of a broader US trade overhaul that includes a baseline 10% duty on all imports and significantly higher rates — up to 49% — for countries with major trade surpluses. Alongside basmati rice, India's shrimp and buffalo meat sectors are also under pressure.
While New Delhi may consider legal or diplomatic recourse, exporters say the damage has begun already. "We risk losing hard-earned market share permanently," Jossan cautioned. "This could reshape global rice trade — and not in India's favour." Commerce and Industry Minister Piyush Goyal is expected to meet exporters on April 9 as the reciprocal tariffs by the US come into effect. According to sources close to the development, the Commerce ministry has called a meeting with exporters to discuss the impact of the reciprocal tariffs on exports and possible strategies to overcome it.
For now, exporters have been working to fast-track shipments in the pipeline and ensure that they are sent by April 9 in order to escape the reciprocal tariffs of the US. However, exporters say that there is a fair bit of uncertainty at present as there are no new orders and everyone is in a wait-and-watch mode. “In most cases, further orders are on hold. It is to be seen whether the increased tariff can be passed on to the consumers. Working capital is also becoming an issue as exporters will have to pay the higher tariff,” said a sectoral expert, adding that it will take about a month’s time to fully assess the situation.
The US has imposed a 26% reciprocal tariff on India with effect from April 9. Currently, pharma remains exempt but the US has indicated that it may review this exemption later as well. The government remains hopeful of a successful negotiation of the bilateral trade agreement with the US that could bring some reprieve on tariffs and is also looking at fast-tracking trade deals with several countries including the European Union.
Exporters, meanwhile, are also hoping for fresh support from the government and a revival of several export incentive schemes such as the interest equalization scheme that lapsed on December 31 last year as well as the extension of the RoDTep (Remission of Duties and Taxes on Exported Products) scheme. Goyal had previously met export promotion councils on March 13. While the meeting was a part of his regular interactions, issues around US trade and tariff announcements were also discussed.
In addition to basmati rice, the Seafood Exporters Association of India (SEAI) President G Pawan Kumar has also voiced concerns regarding the reciprocal tariffs announced by US President Donald Trump, which will have a severe adverse impact on Indian seafood exports to the US market, valued at $2.5 billion in 2023-24. Shrimps accounted for the lion’s share of 92% of the total seafood exports to the US, and India is the largest supplier of shrimps to the US.
Kumar noted, "This tariff will hurt all stakeholders in the value chain and cause all-around distress." He added that India will falter in export performance compared to Ecuador, which is subject to only a 10% tariff. Vietnam and Indonesia face higher tariffs, at 46% and 32%, respectively, giving Ecuador a significant competitive advantage. Kumar emphasized that it will be difficult for Indian seafood exporters to absorb this margin of 16% and compete with produce from Ecuador.
The higher tariffs come into effect from April 9 as 2,000 containers of seafood are currently in transit to the US market. Kumar estimated that the tariff impact to be borne by exporters in India is around Rs 600 crore, while an equal number of containers in cold storage are waiting for shipment. As export orders are on a delivery-at-doorstep basis, the impact of the tariff will need to be absorbed by exporters for goods in transit.
The situation is dire for Indian exporters, as the looming tariffs threaten not only their profits but also the livelihoods of countless farmers and workers dependent on these industries. The stakes are high, and the coming weeks will be crucial for determining the future of these vital sectors in India's economy.
