Pakistan's plan to extend duty drawback benefits to its Basmati rice exporters beyond June 2026 has sparked concern among Indian exporters, who fear the measure will depress global prices and erode India's competitive edge in the aromatic rice market, according to a report by The Hindu BusinessLine.
Duty Drawback Details
Pakistan's Ministry of Commerce on January 23, 2026 issued an order providing benefits of drawback of local taxes and levies (DLTL) collected from the rice sector, effective until June 30. According to the source, Basmati exporters are eligible to claim 9% of the f.o.b (free-on-board) value of the exported rice if they ship the aromatic variety at $750 per tonne or more. The rate is 3% of the f.o.b value if exported below $750 a tonne. Rice Exporters Association of Pakistan (REAP) Chairman Faisal Jahangir was quoted by Pakistani media stating that the DLTL scheme would help lower export prices and improve Pakistan's ability to compete with global suppliers.
Impact on Indian Exports
Indian exporters worry that the $750/tonne benchmark set by Pakistan could become a reference price in international negotiations. A leading Basmati exporter told The Hindu BusinessLine: “The order actually helped Pakistan to improve its Basmati export, even if it is much less compared to India. But the problem is such a low rate of $750/tonne fixed by it becomes a benchmark internationally when Indian rice exporters negotiate deal.” The exporter added that an extension of the duty drawback for another six months would not be in favour of Indian trade or the Basmati brand. Indian Basmati rice realised an average $920/tonne in April 2026, well above Pakistan's benchmark, according to trade sources. According to APEDA data, India's Basmati export in April 2026 stood at 474,091 tonnes worth $436.01 million. For the full 2025-26 fiscal year, India exported 6.52 million tonnes (mt) worth $5.67 billion.
Pakistan's Export Performance
Pakistan had exported nearly 1 million tonnes of Basmati rice in 2025-26, trade sources said. Despite a major drop in shipments during the January-March period, the duty benefit order reportedly helped exports pick up during April-May. Notably, West Asian countries account for 62% of global Basmati trade. Unlike India, there is no prior registration of export contract in Pakistan, nor any levy for it. India trade sources noted that the war did not impact Pakistan's Basmati export during March-May 2026; in those three months, Pakistan exported 28% of the volume shipped in the entire July-June 2024-25 period. Pakistani exporters relied heavily on land routes via Iran to Central Asia as an alternative.
Market Dynamics
The following table summarises key export metrics for India and Pakistan:
| Metric | India | Pakistan |
|---|---|---|
| Basmati export (Apr 2026) | 474,091 tonnes worth $436.01M | Not specified |
| Basmati export (2025-26 full year) | 6.52 mt worth $5.67B | ~1 mt |
| Average realisation (Apr 2026) | $920/tonne | Not specified (benchmark $750/tonne) |
| Duty drawback rate | Not applicable | 9% f.o.b if ≥$750/t; 3% if <$750/t |
Indian exporters now face a dual challenge: Pakistan's price-competitive shipments and the potential extension of the DLTL scheme beyond June 30. With the Strait of Hormuz reopening and West Asian trade normalising, the pressure on Indian Basmati realisations could intensify if Pakistan's lower prices become the new market standard.
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