Why India Has So Much Power Over the Global Rice Market

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India ships more rice than the next four largest exporters combined, and a single change to its domestic food policy has been enough to send rice prices climbing on every continent.

India exported 20.1 million tonnes of rice to more than 170 countries in the 2024–25 financial year. That was close to two-fifths of the rice sold across borders, even though most of the world’s rice never enters international trade. It is grown and eaten within the same country.

That combination gives India unusual influence. A change in its harvest, stock policy or export rules can quickly alter the amount of rice available to overseas buyers. The effect is strongest in countries that depend on imported grain and have limited room to pay more.

India’s position was built over decades. Government purchasing, irrigation, high-yield seeds and a large farming base helped the country move from recurring shortages to record harvests. Those same policies now leave New Delhi with difficult choices over food prices, public stocks, farm incomes and water use.

India Supplies About Two-Fifths of Internationally Traded Rice

India has been the world’s largest rice exporter since 2012. In FY2024–25, its shipments reached 20.1 million tonnes and were valued at $12.95 billion, according to figures reported by India’s Agricultural and Processed Food Products Export Development Authority. The grain went to more than 170 countries (APEDA market news archive).

The latest production estimates show why India can sustain exports on that scale. In April 2026, the US Department of Agriculture’s New Delhi office estimated India’s 2025–26 rice harvest at a record 152 million tonnes. It forecast another near-record crop of 150 million tonnes in 2026–27 and exports of 25 million tonnes during that marketing year (USDA Foreign Agricultural Service). These are forecasts rather than final totals, but they show the size of the supply base behind India’s trade.

Rice behaves differently from wheat or maize because only a small share of production crosses a border. Most rice-producing countries consume nearly everything they grow. Importers therefore buy from a narrower pool than global harvest figures suggest. When India changes the flow into that pool, buyers notice quickly.

The Green Revolution Turned Shortages into Large Surpluses

India’s influence began with a domestic problem. Food shortages in the decades after independence left the country dependent on imports. During the Green Revolution of the 1960s and 1970s, the government promoted higher-yielding varieties, expanded irrigation and supported farmers with assured purchasing.

Punjab and Haryana became central to that system. Farmers had access to irrigation and subsidized electricity for groundwater pumps. Public agencies also bought rice and wheat at a Minimum Support Price, known as MSP. A farmer who sold eligible grain into the procurement system had a government-backed price floor, reducing the risk of planting these crops.

The policy raised output and helped India build a dependable food reserve. It also encouraged farmers in semi-arid areas to keep planting water-intensive paddy. Research has linked procurement incentives and cheap pumping power to falling groundwater levels in Punjab (CGIAR). The production model that created India’s export strength now carries a growing environmental cost.

Government Buying Keeps Grain in Reserve

The Food Corporation of India, or FCI, sits at the centre of the public grain system. It works with state agencies to procure rice and wheat, stores the grain in the Central Pool and releases it for food programmes and market interventions.

The MSP does not mean the government buys every grain of rice produced in India. Procurement is concentrated in certain states and covers rice offered through approved channels that meets the required standards. Still, the volumes are large. The USDA reported that procurement for the 2024–25 marketing year was expected to reach about 55 million tonnes, compared with an annual requirement of roughly 40 to 41 million tonnes for food-security programmes and market operations (USDA Foreign Agricultural Service).

Large public stocks give the government room to respond to a poor crop or a rise in local prices. They can also strain warehouses and public finances when reserves remain far above official stocking norms. India’s Department of Food and Public Distribution publishes quarterly buffer requirements for the Central Pool, while recent USDA reporting describes government-held rice stocks as abnormally high (Department of Food and Public Distribution).

Surplus grain can be released through welfare schemes, sold in the domestic market, allocated for ethanol production or supported for export under the rules in force at the time. Decisions made for storage or food-price reasons can therefore change the supply reaching foreign buyers.

The 2023 Export Ban Showed How Quickly Policy Travels

In July 2023, India banned exports of non-basmati white rice after domestic food prices rose. Restrictions already covered broken rice, and the government later used other measures, including duties and minimum export prices, for additional categories.

The international response came within weeks. The FAO All Rice Price Index rose 9.8% in August 2023 alone and reached a 15-year nominal high. FAO linked the jump to disruption after India’s ban, uncertainty over how long it would last and the reluctance of sellers to make new price offers (Food and Agriculture Organization).

Importers searched for more rice from Thailand, Vietnam and Pakistan. Those suppliers could increase sales, but they could not immediately replace every tonne removed by India. Some governments sought exemptions or direct agreements because rice is a basic food rather than an optional purchase.

India began easing the restrictions in 2024 as domestic supplies improved. The return of Indian grain increased competition among exporters and helped pull Asian export prices down from their earlier peaks. Vietnam’s agriculture ministry data, cited by the USDA, showed its benchmark white-rice export price about 34% lower year on year in August 2025 as Indian supply returned and import demand weakened (USDA Foreign Agricultural Service).

The episode gave the market a clear measure of India’s influence. One domestic policy decision reduced available supply, changed the behaviour of traders and raised the price paid by importers.

Basmati And Non-Basmati Rice Follow Different Systems

Indian rice exports contain two broad markets. Basmati is an aromatic, long-grain rice grown in specified areas of northern India and Pakistan. Buyers in the Gulf, Europe and North America often pay more for its aroma, grain length and origin. Private millers and brands handle much of this trade.

Non-basmati exports cover several varieties, including parboiled rice, white rice and broken rice. These varieties serve large food markets in Africa and Asia. Government procurement and domestic food policy have a stronger bearing on this part of the trade because many of the same types move through India’s public distribution system.

The 2023 ban applied to non-basmati white rice. Basmati exports continued, subject to separate rules. That distinction matters when reading market news. A disruption affecting basmati shipments to West Asia can lift prices for premium aromatic rice without producing the same movement in ordinary white or parboiled rice. A restriction on non-basmati exports reaches a different group of buyers and can have a more direct effect on food costs.

African And Middle Eastern Buyers Feel Different Pressures

India’s customer list shows how widely its rice policy travels. World Bank data based on UN Comrade recorded 18.04 million tonnes of Indian rice exports in calendar year 2024. Saudi Arabia was the largest destination by value, while Benin received the largest quantity among the leading buyers. Iraq, Iran and the United Arab Emirates were also major markets (World Integrated Trade Solution).

The difference between value and volume reflects the type of rice being purchased. Gulf markets buy large amounts of higher-priced basmati. West African countries tend to buy greater volumes of lower-priced non-basmati rice for everyday consumption.

For import-dependent countries, a restriction in India can create two problems at once. Less grain is available, and competing suppliers may charge more. Wealthier buyers can absorb that increase more easily. Low-income households already spending a large share of their budget on food have fewer options, which is why export restrictions can become a food-security issue far beyond India.

Groundwater Loss Could Weaken the Production Base

India’s ability to keep supplying the world rests partly on irrigated farming in northern states. That base is under pressure. Groundwater is being extracted faster than it can recover in many parts of Punjab. One 2023 government assessment put groundwater extraction in Bhawanigarh block in Sangrur district at 348%, meaning annual withdrawals were more than three times the assessed extractable resource (Central Ground Water Board). Conditions vary by district, but the example shows the severity of the problem in the rice-growing belt.

Changing the system is politically difficult. MSP procurement gives farmers a dependable buyer, while subsidised power lowers irrigation costs. A rapid withdrawal of either support could hurt farm incomes. Keeping the same incentives indefinitely would deepen pressure on aquifers and raise the future cost of production.

Researchers writing in Nature Communications found that India could meet food needs while reducing groundwater damage by changing where rice is produced and procured. Their work points towards shifting more production to wetter states rather than relying so heavily on depleted areas (Nature Communications). Such a move would require storage, procurement and transport capacity in new locations. It would also affect farmers whose livelihoods grew around the current system.

India’s Domestic Choices Set the Terms for Overseas Buyers

India has power over the rice market because it combines enormous production with a dominant share of a relatively small export pool. Public purchasing creates reserves. Export rules can release supply or hold it back. Basmati connects India to premium markets, while non-basmati rice feeds countries where price increases carry a heavier social cost.

The country’s next challenge is maintaining that position with less pressure on water and public storage. India must protect domestic consumers and farm incomes while serving buyers that have built their food supply around Indian grain. Each policy change alters that balance, and the consequences appear in import contracts and household food bills far beyond New Delhi.