EU's Green Trade Rules Threaten India's Rice Export Edge Despite Global Dominance

India may dominate global rice exports, but a rapidly evolving regulatory regime in the European Union is exposing structural weaknesses in the country's export ecosystem, threatening its long-term access to one of the world's most lucrative food markets.

A new study by the Indian Council for Research on International Economic Relations (ICRIER) warns that India's biggest challenge is no longer producing enough rice but proving that every grain complies with increasingly stringent environmental, food safety and labour standards demanded by European buyers.

The warning comes at a time when India accounts for nearly 29.1% of global rice exports, shipping rice worth USD 11.8 billion in 2024. Domestic production has also reached record levels, climbing from 105.4 million tonnes in 2014-15 to 154.02 million tonnes in 2025-26, representing a compound annual growth rate of 3.5% over the decade.

Yet the report argues that these impressive production figures mask deeper vulnerabilities.

The European Union, while accounting for barely 2.14% of India's rice exports in 2024, has become disproportionately influential because its regulations increasingly set global benchmarks for premium agricultural trade. India's share of exports to the EU has actually declined from 3.15% in 2014, even as total exports expanded significantly worldwide.

Ironically, India remains the EU's largest external rice supplier, with exports rising from USD 231.3 million in 2015 to USD 550.8 million in 2025, increasing its share of EU rice imports from 11% to 13%. But the report argues that sustaining this position will become increasingly difficult as Brussels shifts beyond conventional food safety checks toward comprehensive oversight of production methods, environmental sustainability and labour practices.

Unlike earlier sanitary and phytosanitary requirements, the EU's Green Deal, Farm-to-Fork Strategy and Corporate Sustainability Due Diligence Directive extend regulatory scrutiny across the entire supply chain—from pesticide use and groundwater management to greenhouse gas emissions, worker welfare and corporate accountability.

The numbers already illustrate the scale of the challenge.

Between 2019 and 2025, Indian rice consignments received more than 200 notifications under the EU's Rapid Alert System for Food and Feed (RASFF), largely due to pesticide residue violations involving chemicals such as tricyclazole and thiamethoxam. In 2025 alone, India recorded 52 export rejection notifications, almost matching Pakistan's 55, while competitors such as Myanmar and Thailand reported none, Cambodia just one, and Vietnam one despite enjoying comparable access to European markets.

Those figures suggest the issue is less about market discrimination than inconsistent compliance.

The report identifies fragmented institutional oversight as one of India's biggest weaknesses.

Multiple agencies—including APEDA, the Export Inspection Council (EIC), the Directorate General of Foreign Trade, the Food Safety and Standards Authority of India (FSSAI), customs authorities and state agencies—share overlapping responsibilities, yet no single organisation is accountable for ensuring end-to-end compliance.

Instead of creating efficiency, the overlapping mandates have increased costs for exporters while diluting accountability. Exporters frequently undergo duplicate registration, certification and testing procedures without mutual recognition from European authorities, forcing them to satisfy both Indian and EU regulatory systems simultaneously.

Laboratory capacity also remains uneven.

Although APEDA has authorised 126 laboratories, only 50 are equipped to test rice exports. Of those, just 47 are also recognised by FSSAI. Similarly, the EIC operates eight laboratories, only six of which can test rice, while 59 of its 81 external laboratories possess rice-testing capability. The fragmented laboratory ecosystem, according to the study, weakens regulatory coherence and contributes to recurring export rejections that should ideally be detected before shipments leave India.

The study also argues that India's existing traceability systems remain incomplete.

APEDA's digital Basmati.Net platform links farmers, traders, millers and exporters, but its recognition remains largely domestic. Unless such systems receive formal acceptance within the EU, exporters will continue to shoulder duplicate compliance costs while facing repeated certification requirements overseas.

Compounding the challenge is India's trade disadvantage.

Rice has been excluded from tariff liberalisation under the proposed India-EU Free Trade Agreement, leaving Indian exports subject to duties of around 7.7%, while competitors such as Vietnam benefit from preferential market access through existing trade agreements. India's Generalised System of Preferences (GSP) benefits are also expected to expire in 2027 unless renewed, further eroding price competitiveness.

The implications extend well beyond Europe.

Because EU regulations increasingly influence global food trade norms, exporters that fail to satisfy European standards risk losing competitiveness in other premium markets that adopt similar environmental and food safety benchmarks.

The report identifies six major environmental risks—including pesticide residues, groundwater depletion and greenhouse gas emissions—and four labour-related risks, including migrant worker vulnerabilities and child labour concerns, that require urgent policy intervention. It argues that compliance can no longer be viewed as a market-specific obligation but has become a prerequisite for participating in global value chains.

Perhaps the report's most important conclusion is that India's challenge is institutional rather than agricultural.

The country already possesses one of the world's deepest rice production systems, extensive export infrastructure and a large network of testing and certification agencies. Yet repeated European border alerts demonstrate that institutional capacity does not automatically translate into institutional effectiveness.

Without integrated traceability, stronger laboratory capability, harmonised regulatory oversight and internationally recognised certification systems, India's leadership in global rice exports may increasingly be measured by volume rather than by access to the world's highest-value markets.