US Tariffs on Indian Rice: Politics Over Policy?

US tariffs on Indian rice imports are primarily impacting American consumers, suggests the Indian Rice Exporters Federation (IREF). While the US remains a key market, India's rice exports are diversified globally. Experts argue that the tariff threats are politically motivated, emphasizing limited impact on Indian exporters due to strong demand elsewhere.

The recent imposition of US tariffs on Indian rice imports is likely to place the financial burden on American consumers, according to the Indian Rice Exporters Federation (IREF). The federation emphasized the commodity's essential role in consumer grocery lists, while also affirming India's ongoing commitment to expanding its trade partnerships globally.

Despite the importance of the US market, India's rice exports are widely spread across different global markets, ensuring resilience. The federation, collaborating closely with the Indian government, is working on deepening current trade relationships and entering new markets. Evidence suggests that US consumers are currently absorbing most of the tariff-related expenses.

Political motivations seem to be at play, with US President Donald Trump's recent threats to impose further tariffs on Indian rice exports. This move is viewed as targeting domestic electoral audiences rather than marking a significant shift in policy, per analysts from the Global Trade Research Initiative (GTRI), a prominent Indian think tank.

The imposition of additional duties would have a minimal impact on Indian exporters due to strong demand in other regions, according to GTRI. Nonetheless, tariffs are expected to increase the price of Indian rice for American consumers. IREF has issued a comprehensive statement explaining the dynamics of Indo-US rice trade.

Dev Garg, Vice President of IREF, described the Indian rice export industry as both resilient and competitive on the global stage. The financial year 2024-2025 saw India exporting USD 337.10 million worth of basmati rice and USD 54.64 million in non-basmati rice to the US, making it a significant market for these varieties.

The demand in the US is primarily driven by communities from the Gulf and South Asia, where basmati rice is essential for specific dishes like biryani. IREF clarified that the distinctive qualities of Indian basmati rice make it irreplaceable with American-grown rice, even amid rising tariffs.

Before the latest tariff increase, Indian rice was already subjected to a 10% tariff, with an additional 40 percentage points added, bringing it to a 50% tariff. Despite the high tariffs, Indian farmers and exporters continue to receive consistent earnings, as the cost hike is absorbed by US consumers.

Analysts from GTRI suggest that India should view the tariff threats as a temporary, politically motivated strategy, advising against any concessions that may weaken its trade position. They argue such concessions could ultimately cause greater harm to US consumers than to Indian exporters.

(With inputs from agencies.)