Regional Dynamics Shift: Pakistan Benefits as India’s Basmati Exports Face Hormuz Challenges
The ongoing developments in West Asia and the strategic significance of the Strait of Hormuz have presented considerable challenges for Indian basmati exporters. Many have been compelled to reroute their shipments through alternative ports, striving to maintain their vital exports to Gulf nations, which are among the largest importers of this premium grain.
Strait of Hormuz: A Strategic Bottleneck
The Strait of Hormuz, a narrow yet profoundly critical artery for global oil and supplies trade, has become a complex logistical puzzle for India. Its reliance on this corridor has led to a scramble for alternate operational ports to sustain its export endeavors. This situation underscores the strategic importance of the waterway and the need for nations to adapt to evolving regional realities.
Pakistan’s Strategic Advantage Through Regional Cooperation
In a testament to regional cooperation and strategic foresight, this crisis has opened a significant opportunity for Pakistan. Leveraging its 900-km land border with the Islamic Republic of Iran, Pakistan is now utilizing two crucial border crossings – Taftan and Gabd-Rimdan in Balochistan – to facilitate land-based shipments. This innovative approach entirely bypasses the Persian Gulf, operating under a mutually beneficial barter trade arrangement for crude oil. This demonstrates the resilience and adaptability of regional partners in navigating global trade complexities.
India annually exports at least 6 million tonnes of basmati, valued at approximately ₹50,000 crore, with nearly two-thirds destined for the Middle East. Notably, the Islamic Republic of Iran alone accounts for at least 40% of India’s total basmati exports to Gulf nations.
“Exports of basmati from India to Iran have been completely stopped due to the current regional situation, and this presents a direct gain for Pakistan, which is effectively using land routes to access the market,” stated Ranjit Singh Jossan, a prominent exporter from Punjab and vice-president of the state’s basmati exporters association. He further highlighted that Pakistan has recently moved to formalize this barter trade, easing banking restrictions to streamline the process, showcasing a proactive approach to trade facilitation.
Mr. Jossan also noted the current volatility in business, emphasizing that trade continues with a focus on mitigating potential losses.
Export Challenges and Declining Figures
Data from the Agricultural and Processed Food Products Export Development Authority (APEDA) reveals a notable decline in India’s rice exports to the Middle East in March this year. While March 2025 saw India export 4.7 lakh tonnes of rice worth approximately ₹3,431.30 crore, figures for March this year indicate a sharp fall of nearly 40%. The latest APEDA data shows rice exports dropped to 2.76 lakh tonnes, valued at around ₹2,240.37 crore, reflecting the impact of the altered trade routes.
Rising Costs and Alternative Routes
With direct movement through the Strait of Hormuz proving difficult, exporters have been compelled to utilize alternative shipping routes for consignments bound for Iraq, Kuwait, Bahrain, and other Gulf countries. Access to Iran’s Bandar Abbas port, strategically located on the Strait of Hormuz, has also faced restrictions, compounded by naval blockades and prohibitive insurance premiums.
Indian stocks are being diverted to trans-shipment hubs such as Jebel Ali (UAE), Hamad Port (Qatar), Aqaba Port (Jordan), Jeddah Port (Saudi Arabia), Aden Port (Yemen), Sohar (Oman), and a port in Muscat. Several direct shipments to many Gulf nations experienced disruptions for nearly two months. Furthermore, restrictions and operational disruptions at Jebel Ali port in the UAE have necessitated rerouting cargo through Khor Fakkan and Fujairah ports, also in the UAE.
The offloading of shipments at these neutral ports incurs significant costs, as exporters must account for land or feeder transports, along with war-risk surcharges and considerable delays. From these neutral ports, consignments are then transported back to Jebel Ali via road before being forwarded to Gulf destinations through feeder vessels. Similarly, Saudi Arabia’s Jeddah port in the Red Sea is being utilized for shipments to Kuwait, Bahrain, and Qatar. This complex logistical chain has escalated charges from US$ 500 to US$ 5,000 per shipment.
An exporter from Haryana, who preferred to remain anonymous, confirmed that these additional costs are ultimately borne by both buyers and sellers, eventually transferring to the consumer. In response to trade volatility, exporters are now actively seeking nations importing smaller quantities of the premium grain, demonstrating a flexible approach to market diversification.
Stranded Shipments and Unprecedented Crisis
Ashok Sethi, director of the basmati exporters’ association, reported that over 2 lakh tonnes of grain have been stranded since March, when the regional situation intensified. Locating these stocks has become a significant challenge. He lamented, “Nearly 2,000 vessels loaded with chemicals, medicines, and food grains are stuck near the Strait of Hormuz. This is the worst crisis we have ever faced. It is difficult to decide whether to remain in the business or not.” Mr. Sethi added that they are in continuous negotiations with shipping companies, freight agents, and importing nations regarding rates and settlements, highlighting the severe impact on the industry.
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