India's farm exports might face challenges in FY26, but all is not lost

India's farm exports could surge past $40 billion in FY25, driven by rice and seafood, but fresh geopolitical tensions and US tariff risks could cloud the outlook for FY26

India’s agriculture and allied product exports are poised to comfortably cross the psychological barrier of $40 billion in FY25 on the back of a resumption in rice exports, a good showing in coffee exports, and steady shipments of marine products, data sourced from the commerce ministry showed.

 

Till January 2025, India had exported around $10 billion worth of rice to the world, which was almost 17.6 per cent more than in the same period last year.

 

As per the latest data, by March 2025, this number had climbed to almost $12.47 billion, making FY25 among the best years in terms of cereal exports for the country.

 

Similarly, marine product exports till March 2025 were $7.45 billion, which was 0.45 per cent more than in the same period last year.

 

Coffee, tea and other exports between April and January in FY25 were almost $4.17 billion, which was 17.3 per cent more than in the same period last year.

 

Overall, exports of agriculture and allied products (this includes marine products) till January 2025 in FY25 were $38.53 billion, almost 8.8 per cent more than in the same period last year (does not include rubber and rubber products).

 

US tariff wars and uncertainty at the border to impact growth? 

However, the big question is: with the changed global scenario post US President Donald Trump’s tariff war unleashed on April 1, will India be able to maintain the growth momentum seen in FY25 in the ongoing FY26 financial year as well, when it comes to agriculture exports?

 

Experts and people in the know said that there are lots of uncertainties gripping global trade of late, which will determine the trajectory of India’s farm sector exports in FY26.

 

The foremost among them are the uncertainties surrounding the US tariff war and the latest border tension with Pakistan in light of the deadly Pahalgam terror attack.

  "US tariffs may not significantly dent India’s agricultural export momentum. America takes roughly 10 percent of India's agriculture export basket, so even a flat 26 per cent duty is a speed-bump, not a road-block. The sharpest squeeze is on shrimp - over 40 per cent of India’s volume heads to the US and could pivot to lower-tariff Ecuador unless prices reset. Yet in many lanes the tables turn: cashew kernels, where India has only a small US footprint, suddenly look competitive after Vietnam is hit with a 46 per cent tariff, while spices, dairy products, herbal extracts, castor oil, guar gum, cereal preparations, and fresh produce all stand to win share. India could harvest an early-bird advantage by clinching a bilateral pact before others move. Any Chinese retaliation against US soy may also open a supply gap that India’s 10-million-tonne soybean and mustard can fill. Net-net, we can expect turbulence and substitution - not a collapse - provided exporters diversify and price sharply," Aswath Balaji, COO, Hectar Global,  a B2B cross-border ecommerce platform that enables wholesalers and retailers procure agri-commodities in bulk from across the globe told Business Standard.  Of the two commodities that have pulled up India’s agriculture and allied sector exports in FY25, cereals — primarily rice — and marine products stand out for now.

 

In the case of rice, most experts believe that if India does not put any undue curbs on exports and if the forthcoming kharif rice production is good enough, India’s overall rice exports could easily cross 21-22 million tonnes (which also includes basmati rice) in FY26.

 

However, the big uncertainty here is how the tension on India’s western border with Pakistan pans out.

 

“If the western ports of the country remain too engaged with any war or conflict-related development, then exporters might prefer sending their consignments through the eastern and southern ports. This could mean an additional $100–$150 per tonne increase in the sale price of rice exported from India. This, I feel, could improve realisations but overall quantity might not go down by much,” S. Chandrasekaran, a leading trade policy analyst and author of the book Basmati Rice: The Natural History Geographical Indication, told Business Standard.

 

He said another point of interest for the global rice markets this fiscal would be how much China buys broken rice for its feed meal usage.

 

“Remember one thing — that the US-China tariff war has made shipments of rice from the US to China difficult, and India usually ships around 4–5 million tonnes of broken rice to the world markets, most of which is used in the form of feedmeal. How this demand pans out is also interesting to watch in the next few months,” Chandrasekaran said.

 

He said the impact of India’s decision to keep the Indus Waters Treaty (IWT) on Pakistan’s rice production and its export market will also be keenly watched.

 

“Pakistan exports around 4-5 million tonnes of rice annually, and if its production gets impacted in any manner because of this water problem with India, it could have an impact on prices,” Chandrasekaran added.

 

India is the second-largest producer and the largest exporter of rice in the world. It produces 26 per cent of global rice and contributes 35 per cent to the global rice trade.

 

Domestic rice production increased from 129.47 million tonnes in 2021-22 to 135.7 million tonnes in 2022-23. Production is forecast to rise to 137.8 million tonnes in 2023-24.

 

The second major item on the list of India’s agriculture and allied exports that is facing rising uncertainty is marine products.

 

With the US accounting for more than 44 per cent of all the marine products that India exports to the world annually (most of which is vannamei shrimp), any drop in demand from that country will have a direct bearing on the domestic market.

 

Though the US has paused the imposition of tariffs for 90 days, traders and market players are hopeful that India will be able to extract a good deal for its marine products industry from the US in this period, which would ward off the threat of high tariffs.

 

Also, per-shrimp realisation — which had dipped below $7 per kg in the post-COVID period from historic highs of almost $9 per kg — is slowly climbing back to its old level. This should improve per-unit realisation even if overall export volumes take a hit.

 

“Indian seafood exports had firmly crossed the $7 billion mark in FY22. However, the imposition of tariffs during the Trump administration has introduced uncertainties around maintaining this level by FY26. Notably, shrimp realisations, which had declined to below $7/kg post-FY22, are now exhibiting an upward trend, crossing the $7/kg threshold once again. Should this recovery in pricing sustain, the $7 billion export mark is likely to be maintained — and could potentially be exceeded in FY26," Nitin Awasthi of InCred Equities told Business Standard.