Kolkata, Mar 1 (PTI) An association of Indian rice exporters on Sunday advised its members to avoid new 'cost, insurance and freight' commitments to Iran and Gulf destinations, amid deteriorating geopolitical situation in West Asia and possible restrictions on shipping through the Strait of Hormuz.

'Cost, insurance, and freight' (CIF) is a shipping agreement that ensures a seller covers the costs, insurance, and freight of a buyer's order when cargo is transported via a waterway.

The advisory comes after the US and Israel launched a major attack on Iran on February 28, with Iranian Supreme Leader Ayatollah Ali Khamenei killed early on Sunday.

The Indian Rice Exporters Federation (IREF) asked its members to conclude sales on free-on-board (FOB) terms, wherever feasible, so that freight, insurance and related risks remain with the international buyer.

The organisation said that developments in Iran and the United Arab Emirates could have an immediate impact on bunker (supplying fuel to ships) prices and may disrupt container and bulk vessel availability.

“In such circumstances, container and bulk freight could increase sharply at short notice, exposing exporters to losses on fixed delivered-price contracts,” the federation said.

It also cautioned that insurance premiums could rise steeply if the situation worsens.

Exporters were advised to exercise restraint while concluding new orders and avoid open-ended, unhedged positions.

India’s rice trade with Africa and West Asia together accounts for roughly half of the country’s total rice exports.

During the April–December period of 2025, exports to West Asia stood at about 3.90 million tonnes, while shipments to Africa were around 7.16 million tonnes.

The federation noted that five of the leading basmati rice destinations—Saudi Arabia, Iran, Iraq, the UAE and Yemen—are located in West Asia and together account for around 50 per cent of India’s basmati exports.

With basmati wholesale prices already rising by 10–15 per cent over the past month and Iran being a key market, the federation expects heightened volatility in prices in the coming days.

IREF said it is closely monitoring developments and is in touch with exporters whose consignments are in transit or awaiting clearance at destination ports.

It added that further advisories would be issued as the situation evolves. PTI BSM BDC

Shipping risk allocation: exporters urged to avoid CIF and prefer FOB as geopolitical risks raise freight and insurance exposure. Advises exporters to avoid new Cost, Insurance and Freight (CIF) commitments to Iran and Gulf destinations and to conclude sales on Free-On-Board (FOB) terms where feasible so freight, insurance and related risks rest with the buyer. Notes that West Asia instability may sharply increase bunker prices, disrupt vessel availability, raise freight and insurance premiums, and produce price volatility; urges restraint, avoidance of open-ended unhedged positions, and monitoring of consignments in transit or awaiting clearance.