Middle East Unrest to Heavily Affect India's Basmati Rice, Fertiliser, and Diamond Sectors: Crisil Report

India’s exports of basmati rice, fertilisers, and diamonds may face significant challenges due to the ongoing unrest in the Middle East, according to a recent report by Crisil Ratings.

Basmati Rice Exports Face Highest Risk

The report highlights that the basmati rice sector is the most vulnerable. This is mainly because countries like Iran and Israel together make up around 14 per cent of India's total basmati rice exports for the financial year 2024-25. While the current situation may only have a limited effect, a long-term conflict could delay payments from buyers in these regions. Such delays would increase the pressure on exporters by stretching their working capital cycles.
However, India still exports to other parts of the Middle East, as well as the United States and Europe, which helps lower the overall risk. But continued instability could make things more difficult for rice exporters.

Exports of Basmati Rice Face Highest Risk

The most vulnerable sector, according to the research, is the basmati rice industry.  This is mainly because, in the fiscal year 2024–2025, nations like Israel and Iran together make up around 14 per cent of India's total exports of basmati rice.  A long-term conflict can cause customers in certain areas to delay payments, even though the current situation might only have a limited impact.  Due to the lengthening of their working capital cycles, such delays would put more strain on exporters.
To help lower the overall risk, India continues to export to the US and Europe in addition to other Middle Eastern countries.  However, ongoing unrest can make things more challenging for rice exporters.

Diamonds and Fertilisers May See Smaller Impact

The diamond industry, which includes cut and polished diamonds, is also expected to feel some pressure. In 2024, Israel accounted for about 4 per cent of India's total diamond exports, making it an important trade partner. Even so, Indian diamond businesses can shift operations to other trading hubs like Belgium or the UAE, where buyers from the US and Europe can still be reached.

The fertiliser sector might also face minor setbacks, though the report notes the impact is likely to be less severe than in the rice sector.

Trade Costs Could Rise

In addition to sector-specific challenges, fluctuations in global crude oil prices are also a concern. Brent crude has been trading between USD 73 and 76 per barrel, a noticeable jump from its earlier average of USD 65 per barrel in April–May 2025. Long-lasting tensions could also increase shipping and insurance costs, which would affect businesses that depend on exports and imports.