India-UK FTA Fails to Resolve the Basmati Rice Dispute

India-UK Trade Deal Leaves Basmati Issue Unresolved

While the newly signed Free Trade Agreement (FTA) between India and the United Kingdom is being celebrated as a landmark deal for Indian agriculture, a critical and long-standing issue remains unaddressed. The steep import duty imposed by the UK on Indian white Basmati rice has not been resolved, leaving a major Indian export at a significant disadvantage.

Follow our WhatsApp Channel for the latest news, alerts & updates – Don’t miss out!

The Core of the Problem

The UK maintains an import duty of £155 per tonne on white Basmati rice. This tariff makes it economically unviable for Indian exporters to sell white rice in the UK market. As a result, 98% of India's Basmati exports to the UK—which receives over half of the 400,000 to 500,000 tonnes sent to Europe annually—consist of cheaper, unprocessed brown rice. This situation has persisted for nearly 30 years. The UK has previously cited concerns about the quality of rice processing in India as a reason for the duty, a claim that Indian exporters reject, pointing to their world-class technology.

How UK Millers Benefit

This trade barrier creates a system where UK-based rice mills profit significantly. They import Indian brown rice at lower prices (around $750-$800 per tonne), process it into white rice, and sell it under their own brands. Indian companies are effectively shut out from selling their own branded, higher-value white rice, which could fetch over $1,000 per tonne. Furthermore, since brown rice contains bran, British mills also gain the additional benefit of extracting valuable rice bran oil and meal from the imported product.

A Missed Opportunity for India

The Indian rice industry had high hopes that the FTA would finally tackle this issue. Industry bodies have been actively lobbying, with letters being sent to top government ministries. However, despite claims that 99% of Indian agricultural products will now have duty-free access to the UK, Basmati rice remains a notable exception. Exporters have suggested that even if the duty remains, India should restrict brown rice exports to smaller consumer packs instead of bulk shipments to capture more value. This unresolved issue represents a significant missed opportunity for Indian farmers and exporters, as substantial profits continue to be captured by UK businesses.