India raises purchase price of rice by 3%, lowest increase in five years

By Rajendra Jadhav

India has raised the price at which it will buy the new-season common rice paddy variety from local farmers by 3%, the lowest increase in five years, as New Delhi struggles to manage overflowing granaries after last year’s record harvest.

India is the world’s second-largest producer of rice and the biggest exporter in the world with a market share of more than 40%.

For the common grade of rice paddy, the government has fixed the support, or guaranteed price at 2,369 rupees ($27.76) per 100 kg (220.46 lb), up from 2,300 rupees last year, Information and Broadcasting Minister Ashwini Vaishnaw said on Wednesday.

Last year, India raised the rice paddy purchase price by 5.4%.

The small rise in the support price will help exporters remain competitive in the world market against rivals such as Thailand and Vietnam, B.V. Krishna Rao, president of the Rice Exporters Association told Reuters.

Every year authorities raise the support price of staples such as rice and wheat to build stockpiles to run the largest food welfare programme in the world, providing access to free grains for those most in need.

But rice stocks, including unmilled rice paddy, in government warehouses totalled 59.5 million tons on May 1, more than four times a government target.

The government is sitting on excess rice stocks and struggling to sell them, said a Mumbai-based dealer with a global trade house.

“It doesn’t want a big spike in production since that would mess things up. It’s hoping farmers switch to other crops instead,” the dealer said.

Rice yields are affected by seasonal monsoon rainfall as rice is a water intensive crop. India’s weather department has forecast above-average monsoon rainfall for the second straight year in 2025.

India also raised the cotton purchase price by 8.3% to 7,710 rupees per 100 kg and the soybean price by 8.9% to 5,328 rupees per 100 kg.

Reporting by Rajendra Jadhav and Mayank Bhardwaj; Editing by Sudipto Ganguly and Rachna Uppal