The war in West Asia now threatens to engulf a key Indian export — Basmati. Exporters from Punjab and Haryana, who together contribute around 75-80% of India’s premium basmati rice exports, say that they are facing serious financial and logistical stress, despite completing more than 83% of their export target for the financial year 2025-26.The situation presents a paradox. Export volumes remain strong, yet anxiety among exporters is growing. The concern arises from geopolitical disruptions that have affected payments, shipping routes, and financial certainty across key markets. Here is why exporters are worried despite achieving most of their export targets.Exporters from Punjab working in Tarn Taran and Amritsar as well as from Haryana said that they had shipped nearly 5.4-5.5 million tonnes (mt) of basmati rice by January 31, which is about 83% of the targeted 6.5 mt for the current financial year and already higher than last year’s total exports of around 6 mt. Demand remained strong through December and January, particularly from West Asian buyers because of the month of Ramadan.However, the concern lies in payments and in ongoing shipments. Nearly 45% of the value of these exports has still not been received. Since basmati trade largely operates on credit, payments from overseas buyers are realised months after delivery. The ongoing conflict has disrupted banking channels and financial systems in parts of West Asia — especially Iran — which are the major buyers of Indian basmati, creating uncertainty about when exporters will receive their money.More in Explained | Why India’s rice production and exports requires a rethinkSome consignments are also stuck either at Indian ports or at sea due to route disturbances, further tightening cash flow. As a result, exporters who have already delivered goods are facing financial pressure because the money required to sustain milling and new contracts has not returned.Satish Jagdamba, president of the All India Rice Exporters Association, said, “Despite completing more than 83% of our export commitments for this financial year, what keeps us up at night is the payment cycle. The war has disrupted banking channels, and exporters are unsure when these funds will actually reach us.”He added that exporters could be affected, given they now face the possibility of defaults if markets remain inaccessible. According to him, shipping companies are asking for higher freight rates.How dependent are exporters on these markets?Story continues below this adIndia’s basmati trade is heavily dependent on West Asia. Countries such as Saudi Arabia, Iran, Iraq, the UAE, and Yemen together account for nearly half of India’s exports, while the wider region absorbs around 70% of total shipments.Iran alone imported about 7.8 lakh tonnes of basmati rice between April 2025 and January 2026. Exporters traditionally extend longer credit terms to Iranian buyers, making the market commercially significant but financially sensitive during instability. Agriculture experts examining ‘rice hispa’ pest attack on basmati crop in Punjab’s Gurdaspur district. Photo: FileIndustry sources say that although export insurance is mandatory, some exporters dealing with Iran had not fully insured shipments due to earlier sanction-related trade practices. These consignments now carry higher payment risks.“Shipping vessels are facing delays at high seas as insurers either refuse coverage or demand higher premiums because conflict zones are considered high risk. This has made it difficult for exporters to move cargo smoothly,” an exporter said.Story continues below this adContainers bound for Iran and Gulf destinations are either waiting at Indian ports or stuck during transit, leading to rising demurrage charges and storage costs. Shipping companies have also increased freight rates due to operational risks.Delay in export payments — and the threat it poses“The payment of nearly 2.5 mt of the total export till date are due from several countries including Gulf countries, mainly from Iran,” Jagdamba said.In the basmati trade, payment cycles are lengthy even under normal circumstances. Exporters typically receive payments from Gulf buyers within 2-3 months, while payments from Iran may take 6-8 months after shipment.This system works only when banking channels remain stable. With uncertainty surrounding Iran’s financial systems due to war and sanctions, and restricted commercial activity in parts of the region, exporters say there is little clarity about payment timelines.Story continues below this adMore in Explained | India has surpassed China in rice production. But this love for paddy is not without pitfallsSome exporters had shipped consignments without full insurance coverage to Iran under earlier trade arrangements. Sources said that under current conditions, this increases the risk of payments becoming unrecoverable. Ashok Sethi, director of the Punjab Rice Millers & Exporters Association, said, “Basmati from Punjab and Haryana has always been a dependable global product, but today we are facing an unprecedented financial challenge. Heavy export was done during December and January ahead of Ramadan, and payments we expected months ago are still pending. And for Iran, the risk is particularly high. Exporters are asking: will we ever receive those funds?”He appealed to the Central government to step in and support the industry during this difficult period.Measures taken by the CentreFollowing concerns raised by exporters, the Central government has initiated steps to monitor and address the situation. At a high-level meeting held on Monday (March 2) at Vanijya Bhawan in New Delhi, senior officials from the Department of Commerce reviewed the impact of geopolitical developments on trade and logistics.Story continues below this adThe government informed industry representatives that a dedicated coordination mechanism is being created to address emerging challenges. A weekly review system has been proposed to track freight costs, shipment disruptions, and payment risks.The Reserve Bank of India and the Department of Financial Services have been asked to examine export credit availability and interest subvention support so exporters facing liquidity stress can access financial relief. The government is also working to ensure transparency in shipping surcharges, prevent excessive freight inflation and improve coordination among ports, customs authorities, banks, insurers and shipping lines.Trade bodies have been asked to submit detailed data on cost impacts and payment exposure so that the Department of Commerce can prepare a risk assessment and coordinate responses across ministries. Officials indicated that a real-time communication mechanism may also be developed to respond quickly to evolving trade disruptions.