Basmati exporters in Punjab and Haryana, already grappling with disrupted shipments and falling exports to the Middle East due to the ongoing West Asia conflict, are facing a fresh blow as shipping companies have imposed a “war risk surcharge” from August 1 that will significantly raise freight costs.
Event Context
Shipping companies have applied a war risk surcharge of $2,500 per container on cargo bound for Gulf Cooperation Council (GCC) countries, including Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain. The move follows continued disruption to shipping through the Strait of Hormuz, forcing vessels to alter drop-off points and increasing operational risks.
With this decision, the cost of moving a single container has climbed to $7,000, up from $500 before the war. “When converted into Indian currency, it comes out to ₹7 lakh per container, taking the transport cost to about ₹3,000 per quintal (100 kilogram),” said an exporter from Punjab.
He added that freshly harvested premium basmati grain will start arriving in the mandis for purchase from September 1. “Before the grain arrives in the mandis, we want to close all previous deals to raise funds for the new trade season,” Jossan said.
Team Analysis
“Due to the war situation, several reputable vessel companies have moved out of the Middle East. Those transporting freight to the region are taking risks and are being forced to pay hefty premiums for safe passage,” said Ranjit Singh Jossan, vice-president of the Basmati Exporters’ Association, Punjab.
Sharing another concern, Punjab Rice Industry Association president Bal Krishan Binta said the fresh surcharge will create a disparity as importers compare grain prices offered to Europe and North American nations where movement was smooth, while the Middle East involved significant risk.
“Shipments that previously reached Middle Eastern destinations within 8 to 10 days are now taking 30 to 45 days, disrupting supply chains, increasing working capital requirements, and creating uncertainty in delivery schedules. Owing to this scenario, many exporters are planning to move out of the trade,” Binta said, raising apprehensions over the multi-crore trade from India.
India exports ₹50,000 crore worth of premium grain every year, with Punjab and Haryana holding a considerable share of over 40%.
source
To avoid the war risk surcharge, exporters are trying to send consignments via break-bulk vessels through chartered ships, but the lack of arrangements for unloading loose grain at destination ports is another challenge.
According to Agricultural and Processed Food Products Export Development Authority (APEDA), basmati exports to the Middle East have nearly halved since the conflict began in February 2026—from 4.7 lakh tonnes in FY 2024-25 to 2.7 lakh tonnes so far.
Binta added that APEDA, which played a key role in supporting the trade, was also out of the picture now. An official, requesting anonymity, said the volatile war scenario had restricted the authority’s role.
