Irans threat halts Punjab basmati rice exports through Strait of Hormuz

Iran’s threat to target any ship attempting to transit the Strait of Hormuz severely impacted basmati rice exports from Punjab, as exporters said the vessels carrying basmati consignments were now hesitant to sail through the region and several shipments were stuck, even as the fear of payment defaults continued to grow among basmati traders.

Tejinder Singh, CEO of Amar Singh Chawla Wala, makers of the Lal Qila basmati brand, said on Thursday that basmati rice shipments to Iran, Dubai, Afghanistan and Kazakhstan came to a halt. He warned that if the conflict continued for another 5 to 10 days, the situation could become disastrous for the rice industry in the region.

Explaining the gravity of the disruption, he said that the Strait of Hormuz, which separated Iran from the United Arab Emirates, was the key maritime corridor for major basmati-consuming markets for Punjab’s rice. As a result, consignments are currently stuck at Iran’s Bandar Abbas Port and Dubai’s Jebel Ali Port, with exporters uncertain about their fate.

He further explained that after the closure of the land route to Afghanistan via Pakistan, basmati exports to Afghanistan were routed through Iran by road, while shipments to Kazakhstan moved via rail links, both of which were now obstructed.

When asked about the export volumes, Tejinder Singh said that of the roughly 60 lakh tonnes of basmati exported from India annually, Punjab and Haryana together account for 17% to 20%.

Under the current circumstances, he warned, basmati prices could fall sharply if the existing route, or any alternative route, was not opened soon, though he admitted that the chances appear bleak.

Sanjay Chadha of Sifti Rice Mills said that basmati prices here already fell by Rs 400 to Rs 500 per quintal. He said that vessels carrying basmati consignments, which departed from Mundra Port in Gujarat and were still sailing within Indian waters, were instructed to return, and the consignments were offloaded there.

Expressing concern over the growing financial risks, Sanjay said exporters are not only anxious about payment defaults, but also about the sharp increase in sea freight charges once shipping routes reopen and normalise.

This article has been republished from The Times of India.