US Tariffs on Indian Basmati Open Door for Pakistan Rice Boom in American Market

A hefty 50% US tariff on Indian basmati rice is dramatically reshaping America's aromatic rice imports, handing neighboring Pakistan a significant competitive advantage and fueling a surge in its exports to the United States.

The tariffs, initially imposed during the Trump administration and linked to disputes over India's trade relations with Russia, hit various Indian goods. While some sectors later gained exemptions, the 50% duty on premium basmati rice remained firmly in place. This has made Indian basmati far more expensive for US buyers, with prices reportedly soaring to nearly $1,800 per metric tonne.

Pakistan Steps Into the Gap

Pakistan, exporting its own high-quality basmati rice to the US, faces a much lower tariff of just 19%. This translates to a substantial price difference, with Pakistani basmati landing in the US at a competitive $1,450 per metric tonne – roughly $350 cheaper per tonne than the tariff-laden Indian equivalent.

Indian industry reports suggest the tariff could slash their basmati exports to the US by 50-80%. This sudden vacuum creates a golden opportunity for Pakistani exporters to capture a larger share of the lucrative American market.

Pakistan's Basmati Exports Surge

Pakistan is seizing the moment. Data from the Rice Exporters Association of Pakistan (REAP) reveals impressive growth:

• FY24 Exports: 772,725 tonnes of basmati rice worth $876.9 million.
• Year-on-Year Growth: A significant jump from 595,120 tonnes ($650.4 million) exported in FY23.
• Rising Value: The average export price per tonne also increased, from $1,092.93 to $1,134.86, indicating strong demand and perceived quality.

The US Becomes Pakistan's Top Basmati Buyer

Crucially, the United States has emerged as Pakistan's single largest basmati rice market. According to Volza's Global Trade data (Nov 2023 - Oct 2024):

• US Share: 24% of Pakistan's total basmati exports (1,519 shipments).
• Key Markets: Followed by Italy (14%, 908 shipments) and the United Kingdom (11%, 716 shipments).
• Dominant Trio: These three markets alone accounted for nearly half (49%) of Pakistan's basmati shipments.

Pakistan now supplies basmati rice to over 110 countries worldwide, including major destinations like Australia, Saudi Arabia, the UAE, Canada, the Netherlands, and Germany.

Growing US Appetite for Imported Aromatic Rice

The opportunity extends beyond the tariff shift. The US Department of Agriculture (USDA) highlights a long-term trend:

• Rising Imports: Imported rice now accounts for over 25% of the US domestic market (up from just 7% in 1993/94).
• Aromatic Demand: More than 60% of these imports are aromatic varieties from Asia, primarily Thai jasmine and Indian/Pakistani basmati.
• Domestic Gap: While the US grows some aromatic rice, it differs in quality and aroma from the prized Asian basmati and jasmine types.
• Future Growth: The USDA projects continued growth in demand for these imported aromatic rices, signaling a sustained and lucrative market for suppliers like Pakistan.

The Road Ahead

The US tariff policy has inadvertently handed Pakistan a powerful edge in the critical American basmati market. With its significantly lower tariff rate, competitive pricing, established quality, and the US's growing appetite for imported aromatic rice, Pakistan is well-positioned to substantially expand its basmati exports and revenue in the coming years, capitalizing on the void left by India's diminished access.