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Foreign Policy Watch: India-United States

Why India is not ‘dumping’ rice in the US as Trump says

Explained | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

Introduction

The claim that India is “dumping” rice in the US market has resurfaced amid renewed India-US trade negotiations. However, trade data, export composition, and tariff structures indicate that India’s rice exports to the US are neither large in volume nor price-distorting. The issue assumes significance as it intersects with US protectionism, agricultural trade sensitivities, and India’s broader export strategy.

Nature of the Allegation and Its Context

  1. Political Assertion: The allegation of rice dumping was raised by US President Donald Trump while justifying potential tariff actions against Indian exports.
  2. Negotiation Backdrop: The statement coincides with the restart of India-US trade talks involving the US Trade Representative and India’s chief negotiator.
  3. Trade Sensitivity: Agricultural trade remains among the most politically sensitive sectors in US trade policy.

Scale of India’s Rice Exports to the US

  1. Limited Export Share: The US accounts for a marginal share of India’s rice exports.
  2. Export Value: India exported rice worth $337.1 million to the US in 2024-25.
  3. Global Comparison: Major destinations include Saudi Arabia, Iran, UAE, Yemen, and African countries, all importing far larger volumes than the US.
  4. Import Dependence: The US is not a major rice producer but exports more rice than it imports.

Composition of Exports and Price Dynamics

  1. Premium Product Profile: India’s exports to the US are dominated by basmati rice, a high-value, niche product.
  2. Price Differential: Basmati rice exported to the US is priced at $900-1,125 per tonne, compared to $700-800 per tonne for non-basmati.
  3. Market Positioning: Such pricing negates the economic logic of dumping, which requires below-cost sales.
  4. Consumer Segment: Exports cater primarily to ethnic and gourmet markets rather than mass consumption.

Non-Basmati Exports and Market Structure

  1. Negligible Share: Non-basmati rice exports to the US are minimal, accounting for a small fraction of total exports.
  2. Primary Markets: Africa and parts of Asia dominate India’s non-basmati rice trade.
  3. Trade Pattern: Countries such as Benin, Guinea, Côte d’Ivoire, and Bangladesh import substantially larger volumes.

Tariff Structure and Impact on Indian Exports

  1. Existing Tariffs: Indian rice already faces US tariffs, limiting competitiveness.
  2. Potential Tariff Hike: Trump has reiterated the possibility of imposing additional tariffs across sectors.
  3. Marginal Impact: Analysts predict note that tariffs may not significantly affect rice exports due to their niche positioning.
  4. Trade Balance Shift: India’s trade surplus with the US has declined from $35.7 billion (FY23) to $31.7 billion (FY25).

Broader Trade Negotiations and Strategic Signals

  1. Negotiation Progress: Both sides expect a breakthrough due to sustained engagement.
  2. Strategic Context: The trade talks are also shaped by US efforts to rebalance supply chains and counter China.
  3. Indian Leverage: India’s diversified export basket and regulated agricultural exports strengthen its negotiating position.

Conclusion

The allegation of rice dumping lacks empirical support when examined against export volumes, pricing structures, and product composition. India’s rice exports to the US are limited, premium-priced, and non-disruptive. The issue reflects broader protectionist pressures rather than a genuine trade distortion, underscoring the importance of data-driven engagement in India-US trade negotiations.

Rice in India: Key Value-Addition Statistics 

Area, Production and Yield

  1. Area under rice: ~ 44 million hectares, about 23-24% of India’s gross cropped area.
  2. Production: ~ 135-138 million tonnes (record levels in recent years).
  3. Yield: ~ 3.9-4.1 tonnes per hectare, lower than China but improving due to HYVs and irrigation.
  4. Seasonal spread: Dominantly kharif crop, with rabi rice significant in eastern and southern India.

Basmati vs Non-Basmati Rice

  • Basmati rice:
  • Area: ~ 1.5-1.6 million hectares
  • Share in production: ~ 4-5%
  • Share in export value: 25-30% (premium pricing)
  • Price: Significantly higher than non-basmati
  • Non-basmati rice:
  • Area: ~ 42 million hectares
  • Backbone of domestic food security
  • Accounts for bulk of export volume, especially to Africa and Asia

Major Rice-Producing States

  1. West Bengal: largest producer
  2. Uttar Pradesh: second largest
  3. Punjab: high productivity; major surplus state
  4. Andhra Pradesh & Telangana: export-oriented surplus
  5. Odisha, Chhattisgarh, Bihar, Tamil Nadu, Assam: major contributors.
  6. Basmati-specific states: Punjab, Haryana, Western Uttar Pradesh, Uttarakhand, parts of J&K.

Rice in India’s Agricultural Trade

  • Rice = India’s single largest agri export commodity by value.
  1. Basmati exports: High-value, niche, quality-driven.
  2. Non-basmati exports: Volume-driven, price-competitive.
  3. Policy role: Central to debates on MSP, food security, buffer stocks, and WTO subsidy limits.

UPSC-Relevant Analytical Points

  1. Food security vs exports: Non-basmati supports PDS and buffer stock; basmati supports farmer income and forex.
  2. WTO relevance: Rice is central to India’s public stockholding and subsidy notifications under AoA.
  3. Environmental concern: Rice cultivation linked to groundwater depletion and stubble burning in north-west India.
  4. Strategic leverage: Dominance in global rice trade gives India bargaining power but invites protectionist scrutiny.

WTO Dispute & Legal Hooks

  1. WTO angle: India’s farm subsidies (especially MSP + public stockholding for rice & wheat) have been repeatedly challenged through US “counter-notifications” at the WTO, alleging India breaches the 10% de-minimis limit for product-specific support under the Agreement on Agriculture (AoA, Article 6). 
  2. Peace clause use: India itself notified breaching the rice subsidy cap in 2018–19 and invoked the Bali “peace clause” on public stockholding for food security, shielding it (temporarily) from legal action even if limits are crossed. 
  3. Related dispute: A 2018 WTO case on India’s sugar and sugarcane support saw a panel ruling (2021) that parts of India’s domestic support violated AoA rules; India appealed into the non-functional Appellate Body, so the case remains unresolved.

India-US Trade Share (Official Source)

  1. Overall trade: As per USTR (official US data), total US–India goods and services trade was about $212.3 bn in 2024, with goods trade at $128.9 bn (US exports $41.5 bn; imports from India $87.3 bn).
  2. Agriculture slice: A recent brief on India–US agricultural trade notes India’s agri exports to the US are about $5.7 bn annually, a small share of both India’s total exports and overall bilateral trade.

UPSC RELEVANCE

[UPSC 2021] What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization (WTO) in relation to agricultural subsidies.

Linkage: It is relevant to GS Paper III as WTO concerns over farm subsidies underpin dumping allegations against India, including in rice trade with the US. It helps assess whether export competitiveness is subsidy-driven or market-based.

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