India’s boom in rice exports — which supply key Gulf markets — is deepening groundwater stress in key producing states, Reuters reports. Current export volumes could be threatened if water depletion continues, sparking fears of an export ban return.

Supply squeeze: India accounted for just over 40% of global rice exports in 2023-24, shipping out a majority of the 20 mn tonnes of supply from Punjab and Haryana. These states now have groundwater levels now classified as “over-exploited” or “critical” by government assessments, with water tables falling to between 80-200 ft in places, compared to 30 ft below ground a decade ago. Some farmers are installing deeper tubewells and spending more on pumping systems to maintain output, adding pressure on already-strained water reserves.

Gulf exposure: Saudi, Iraq, Iran, and the UAE are major markets for Indian rice — particularly premium basmati. If core producing states continue to be shackled by groundwater stress, supply constraints will rocket for import-dependent regions such as the Gulf and North Africa. India imposed export restrictions back in 2023 to manage domestic prices, and similar curbs remain a policy lever whenever food supply output tightens.

The hidden water trade: Producing 1kg of rice requires 3k-4k liters of water, so Gulf nations are essentially importing bns of cubic meters of Indian groundwater at prices suppressed by Indian state subsidies.

Our take: We are currently in a “rice glut,” with record low prices of USD 338 per ton as of this month, but this is a false floor. India is currently caught between domestic farmer protests and long-term water survival. The moment New Delhi prioritizes the latter, the Gulf’s “just-in-time” rice supply chain will face its greatest stress test since the 2007 food crisis. Saudi Arabia and the UAE are aggressively pivoting to agri-tech investments and African land-grabs — “de-risking” from Indian staples isn’t just wise, it’s urgent.

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