Trade negotiations between the US and India have once again reached a tense point. US President Donald Trump recently hinted that he may impose new tariffs on rice imported from India. This statement comes at a time when both countries are already debating several trade-related issues. Trump has also claimed that India is ‘dumping rice in the US market’.
Understand why this issue goes beyond diplomacy and how it could directly impact India’s rice exports, food companies, US importers, and global agricultural trade.
What’s Happening?
US President Donald Trump recently suggested that new tariffs may be imposed on India’s rice exports. During a roundtable at the White House, where he announced a $12 billion support package for American farmers, Trump said US farmers are suffering due to a cheap foreign supply, and that ‘India dumping rice at a low price’ is a major reason behind it.
Questioning US Treasury Secretary Scott Bessent, Trump asked, “Why is India allowed to sell such cheap rice in the US? Have they been given some exemption? They will have to pay tariffs.” His remarks clearly indicate that the US is considering strict measures against Indian agricultural exports, particularly rice.
India has not issued an official response yet, but the development has increased volatility in Indian markets.
India’s Global Position in Rice Exports
India is currently the world’s largest producer of rice, with an annual output of around 150 million tonnes. It leads global production with a 28% share. According to the Indian Rice Exporters Federation (IREF), India accounted for 30.3% of the world’s total rice exports in 2024–2025, making it the top exporter globally.
Although India exports rice to several countries worldwide, its share in the US market remains relatively small. According to IBEF data, India exported about 2,34,000 tonnes of rice to the US in FY24, less than 5% of its total basmati exports of 5.24 million tonnes. West Asia continues to be the largest consumer region for Indian rice, remaining the primary market for both basmati and non-basmati varieties.
What Does This Mean for Investors?
The warning by US President Donald Trump about imposing additional import duties on Indian rice had a direct impact on the Indian stock market. On December 9, shares of major rice exporters such as KRBL, LT Foods, and GRM Overseas saw a sharp decline.
This sudden fall indicates that investors have become cautious about the risk of potential US tariffs. If the US proceeds with additional duties on Indian rice, the impact will not be limited to these companies alone. India’s competitive position in the global market may shift, exporters’ earnings could come under pressure, and the effect may eventually trickle down to farmers as well.
For investors, this situation signals heightened volatility, especially in FMCG and agri-export-linked stocks. Moreover, if trade tensions between the US and India escalate, overall market sentiment could weaken, as global investors typically adopt a risk-off approach during such uncertain periods.
What’s Next?
Trade discussions between India and the United States are expected to intensify in the coming days. According to PTI, both countries will hold a three-day negotiation round in New Delhi from December 10 to 12 to finalise the first phase of a trade pact. This indicates that reducing tensions and finding trade solutions is a priority for both sides.
According to Moneycontrol, Dr. Prem Garg, President of the Indian Rice Exporters Federation, believes that even if Trump increases tariffs on Indian rice, the actual impact on India’s exports will be minimal. He argues that the global demand for Indian basmati remains extremely strong, and India exports over 6 million tonnes of basmati every year.
He adds that the US is only a small market within this export mix, and Indian rice is not being ‘dumped’ there. Since American importers have already placed supply orders, any potential tariff hike is unlikely to cause significant disruption.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
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