G. CHANDRASHEKHAR, Advisor, ERTF
The hot topic in the market for the last two days is the threat of tariff imposition on India's rice exports to the US on the grounds of 'dumping'. Already Indian rice exports to the US are burdened with a 50 percent tariff.
The US accusation of dumping is weak based on ground realities. Let's see the facts. The US produces 7- 8 million tons of rice and exports approximately 4 million tons worth about $ 2.5 Billion to various countries including Mexico, Canada, Japan, South Korea and many more.
At the same time, the US imports about 1.3 million tons of rice every year from different origins including Thailand, India and so on. Of the total US imports, Thailand rice accounts for over 50 percent.
India's rice export to the US comprises mainly Basmati rice which is long grain aromatic rice popularly used for cooking specialty food preparations (like Biryani, Pulao). In 2024-25, India exported 275,000 tons of Basmati rice and about 60,000 tons of non-Basmati rice valued around $ 300 Million.
In threatening to impose (additional) tariffs on the ground of dumping, the US authorities must bear in mind the following points:
- There is no dumping in the strict sense of the term. Indian Basmati rice destined for the US is not priced any lower than domestic market price. It is a premium cereal much sought after by discerning consumers around the world. There is no reason for India to sell this premium Basmati rice at lower prices.
- Basmati rice is unique to the Indian sub-continent; and the US does not produce this rice variety. So there is no competition with US rice, much-less unfair competition.
- India's exports are almost always against export orders from the US and often against LC or advance payment.
- Indian Basmati rice caters to a specific demand segment in the US; and the existing tariff is already absorbed by the consumers.
- Any additional tariff would adversely impact US consumer interest.
It appears the term dumping has been used rather loosely in the meeting the US President held recently. The complaint of dumping is unfortunate and certainly incorrect. India should not let these threats go unanswered. A team of USTR is in India Dec 9-10 for the ongoing BTA negotiations. The Indian side should discuss the tariff threat on Indian rice with the USTR team and provide the correct perspective.
It is hoped the US administration would appreciate the facts and withdraw the threat.