Unpacking the India-US Rice Trade Controversy

Understanding the Dynamics of India-US Rice Trade

Recent allegations by US President Donald Trump claim that India is "dumping" rice in the United States, adversely affecting American farmers. However, an analysis of trade data suggests otherwise.

The United States is not a major rice producer, exporting significantly more rice than it imports. In the 2024-25 period, US production stood at only 7.05 million tonnes, while India produced a staggering 150 million tonnes. Interestingly, the US managed to export 3 million tonnes while importing 1.6 million tonnes of rice.

In terms of value, US rice imports in 2024 amounted to $1.5 billion, predominantly sourced from Thailand, with imports from India being considerably lower. This indicates that India's rice exports to the US are limited, and the market is hardly inundated with Indian rice.

India's Leadership in Global Rice Exports

In the global arena, India retained its position as the leading rice exporter in 2024-25, exporting 198.65 lakh tonnes (approximately 19.86 million tonnes) across various categories, including basmati, non-basmati white, and broken rice. The value of these exports surpassed $12.95 billion, solidifying India’s share at around 40% of the global rice market.

Contributing factors to this success include favorable monsoon conditions, competitive pricing, and the removal of export restrictions on non-basmati rice. India’s rice production accounted for 28% of global output, with significant improvements in yield from 2.72 t/ha in 2014-15 to 3.2 t/ha in 2024-25, attributed to advancements in agronomy and irrigation.

Currently, India exports rice to over 172 countries and aims to expand its reach to 26 additional markets, including the Philippines, Indonesia, the UK, and Mexico, as reported by APEDA.

US Tariffs and Their Implications

Days before negotiations in New Delhi, President Trump suggested implementing new tariffs on Indian rice, citing claims of "dumping." Nevertheless, experts believe this move is politically motivated, aimed at gaining favor with American farmers rather than addressing real trade concerns.

The US primarily imports premium rice varieties, such as Thai Hom Mali and Indian basmati, which are priced significantly higher than typical US-exported rice. The price range for these imported varieties is between $690 and $1,125 per tonne, compared to $560–$675 per tonne for standard US rice. Therefore, the notion that India is dumping cheap rice is unfounded.

Impact of Potential Tariffs on India's Rice Exports

As the largest rice exporter globally, India ships approximately 22.5 to 25 million tonnes annually, with the US accounting for a tiny fraction of that market. For instance, in the 2024-25 period, India exported 60.65 lakh tonnes of basmati rice, with only 2.74 lakh tonnes (around 4.5%) going to the US. Non-basmati rice exports to the US were even smaller, totaling just 0.61 lakh tonnes (approximately 0.4%).

Despite the threats of tariffs, analysts predict minimal impact on India, as US demand for Indian rice is negligible compared to other export destinations. Countries in West Asia and Africa dominate the basmati and non-basmati rice markets, respectively.

Even with the imposition of new tariffs, the consequences for India would be minor, as Indian exporters are not reliant on the US market for substantial volumes or revenue. Conversely, tariffs would likely increase rice prices for US consumers, making it a politically charged issue rather than a genuine trade concern.

Frequently Asked Questions (FAQs)

Q1. What are the primary rice varieties exported by India?
Answer: India exports various rice varieties, including basmati, non-basmati white, broken rice, and parboiled rice. Basmati remains the most sought-after variety globally, particularly in the Middle East.

Q2. How does US rice production compare to India’s?
Answer: In 2024-25, US rice production was 7.05 million tonnes, significantly less than India's 150 million tonnes. This highlights India's dominance in global rice production.

Q3. What impact would US tariffs have on Indian rice exports?
Answer: Experts believe that potential US tariffs would have a negligible impact on Indian rice exports, as the US market constitutes a small fraction of India's total rice exports.

Q4. Why does the US import rice from India?
Answer: The US imports rice from India mainly for premium varieties such as basmati, which are favored for their quality and aroma, rather than low-value rice.

Q5. Which countries are the biggest buyers of Indian rice?
Answer: Major buyers of Indian rice include countries in West Asia like Saudi Arabia and Iran, as well as African nations such as Benin and Cote d'Ivoire.

UPSC Practice MCQs

Question 1: What percentage of global rice production does India account for?
A) 20%
B) 28%
C) 35%
D) 40%
Correct Answer: B

Question 2: Which rice variety is primarily exported to the US from India?
A) Non-basmati white
B) Jasmine
C) Basmati
D) Brown rice
Correct Answer: C