India carrying huge rice stocks over three years old, allege traders

While paddy is procured at around ₹23,000 a tonne, processing, storage, and interest rates drive up the total cost to ₹35,000 a tonne
| Photo Credit:
SRINATH M

As India carries a record high stock of white rice in its granaries, at least over 30 million tonnes (mt) are feared to be over three years old, allege trade sources.

Data available from the Food Corporation of India (FCI) show that the country had 37.97 mt of rice and 21.35 mt of unmilled paddy (14.5 mt of rice when processed) as of September 1, the highest on record. 

According to sources, who point to data, the government procured 68.4 mt of rice in 2022-23, 71.9 mt in 2023-24 and 76.81 mt in 2024-25. Of the procured rice, at least 35.3 is distributed through ration shops for various schemes. 

In September 2022, the FCI had  24.46 mt of rice and 16.16 mt of paddy (10.8 mt of rice). In September 2023, it had  23.28 mt of rice and 16.07 mt of paddy (11.25 mt rice), while in September 2024, the rice inventory was 32.3 mt of rice and 14.82 mt of paddy (9.92 mt of rice).

Huge carrying costs

“If you see the procurement and stocks, it is clear that the FCI is carrying old rice stocks,” said a trade source, who did not wish to be identified.

While paddy is procured at around ₹23,000 a tonne, processing, storage, and interest rates drive up the total cost to ₹35,000 a tonne. “If storage and interest costs are added, then the cost of carrying the old stocks of rice is huge,” said the trade source.

“Though the Centre is offering rice under the open market sale scheme (OMSS) at  ₹28,000 a tonne, there are no takers,” said the source, adding that world over, the demand is sluggish.

Exporters’ concerns come on the heels of Vietnam and Thailand expressing the fear that India could begin to dump old rice stocks in the global market. They said the stocks could be around 20 mt, and it could depress prices in the global market. 

Vietnam, an exception

With only a couple of countries buying rice, particularly the Philippines, barring Vietnam, all other nations have cut their prices in the past fortnight. Prices are ruling at multi-year lows currently. 

New Delhi-based trader Rajesh Paharia Jain said if the global trading in the 2025-26 marketing year (beginning September) is taken into account, then Thailand could export nearly 10 mt, Vietnam and Pakistan 7-8 mt,  Myanmar 2-3 mt and the rest of the world 4-6 mt. “It would leave India exporting 19-20 mt, including basmati,” he said.

However, the lower price could affect rice production next season in other countries. “If India decides to offload more rice, then it could affect other countries. It could lead to lower production,” said Jain. 

During Covid, India had plenty of surplus, and thus, it helped the country to enjoy a $100 a tonne advantage in the global rice market. The production in other countries was affected due to drought. 

Ethanol diversion

However, most of the countries are selling lower than India, except for parboiled rice. India is still competitive in the parboiled rice market and caters mainly to Africa in this segment. 

India’s rice production is projected to be at another record high of 151 mt during the current crop year (July 2025-June 2026) against 149.07 mt in 2024-25. India is currently the number one rice producer in the world. 

 A New Delhi-based trade analyst said there should be no worry over the three-year-old stocks as they can be diverted for the production of ethanol. 

However, the trade source said India should look at liquidating its old stocks the way it was done during the Atal Bihari Vajpayee regime in 2003-04. “The FCI should have more fresh rice stocks with it,” the source said. 

However, the analyst said, “We have to remember that rice stocks came in handy when wheat production was affected.”  

Published on August 29, 2025