Authors: Aishwarya Jadhav, Matt Piotrowski and Natasha Ferrari

Navigating Climate Transitions: The Path to Sustainable Indian Rice Production

Climate transitions are influencing a shift towards a more sustainable Indian rice sector

The shift towards a sustainable Indian rice sector faces mounting challenges from climate change, requiring a delicate balance between food security, economic stability, and environmental sustainability. Government regulations on exports and pricing aim to protect domestic consumers, yet they can also disrupt global rice markets. At the same time, climate change-driven disruptions such as erratic monsoons, droughts, and floods threaten rice yields, pushing policymakers and farmers toward sustainable solutions – otherwise known as climate transitions.

Navigating these intertwined challenges has become a defining issue for the future of Indian agriculture. The Indian government is developing programs that encourage rice producers to adopt more sustainable practices. For investors and companies looking to engage with this important global sector, there is an opportunity to prepare for regulatory shifts and market fluctuations, and to align their strategies with India’s sustainability goals.

The State of India’s Rice Sector 

Valued at $54 billion and projected to reach $60.90 billion by 2030, India’s rice industry is one of the world’s largest, supplying over 40 percent of global rice. Rice is also the country’s most important staple crop, with over half its population relying on this crop for sustenance. It is also deeply rooted in Indian culture, diet, and tradition. However, traditional farming practices contribute significantly to environmental degradation. Flooded paddy fields and widespread rice straw burning emit 97 million metric tonnes of CO2 equivalent annually, accounting for 20 percent of India’s methane emissions.

Additionally, the overuse of irrigation water, synthetic fertilizers, and pesticides degrades ecosystems, pollutes water bodies, and depletes groundwater. As climate change intensifies, these practices are becoming increasingly unsustainable, as erratic and extreme weather events pose major threats to yields and food security. This creates urgency for a structural shift toward more resilient and environmentally responsible agricultural methods.

Policy and Market Implications from Physical Risks 

Climate change is already impacting India’s rice production. Rising temperatures, shifting monsoons, and extreme weather events like floods and droughts are reducing yields and threatening supply chains. The 2022-23 crop year saw a modest decrease in rice production to 124 million metric tonnes, highlighting the vulnerability of the sector to the physical risks of climate change. In response, the Indian government has imposed export restrictions, including a 2023 ban on non-basmati white rice, a 20 percent duty on parboiled rice, and broader trade controls to ensure domestic availability.

While these measures aim to stabilize food prices and protect Indian consumers, they disrupt global rice trade. As the world’s largest exporter, India’s decisions significantly influence global supply and pricing. Persistent restrictions could prompt importing nations to diversify suppliers, potentially diminishing India’s market dominance. For farmers and exporters, this means higher uncertainty, reduced revenues, and difficulty planning for the future. Export restrictions, price controls, and abrupt regulatory changes create volatility for both domestic and international stakeholders. In 2022, Indian farmers faced an implicit tax of $169 billion due to trade limits on key commodities, including wheat and rice. For agribusinesses and investors, such shifts pose challenges for long-term planning and profitability.

At the same time, the physical risks are prompting many farmers to reconsider crop choices. With groundwater depletion and unpredictable rainfall, many are shifting toward less water-intensive crops like millet, pulses, and oilseeds. These alternatives are more resilient to climate stress and offer growing market potential, particularly as consumer interest in diverse, climate-smart staples increases. However, rice’s inelastic demand ensures it remains essential, and those who continue to cultivate it may benefit from higher market prices in periods of reduced supply – with consumers often prepared to pay more for sustainable varieties. Farmers navigating these challenges with innovative practices can secure higher profits and play a critical role in meeting global rice demand.

To address climate risks and support sustainable agriculture, the Indian government is rolling out initiatives to promote efficient irrigation, encourage sustainable land use, and support the development of climate-resilient rice varieties. Programs like the National Mission on Sustainable Agriculture and the Pradhan Mantri Krishi Sinchayee Yojana offer incentives for adopting water-saving technologies and reducing emissions.

India also faces increasing international pressure to reduce methane emissions from agriculture, especially rice cultivation. Global climate commitments and funding mechanisms like carbon markets are pushing for measurable reductions. Achieving this will likely require changes in cultivation practices, such as alternate wetting and drying, which may require training and infrastructure investments.

Technology: A Double-Edged Sword 

Technological innovation presents both opportunities and challenges for India’s rice sector. The government and private sector are investing in mechanization, climate-smart seed varieties, and precision agriculture tools. Techniques such as the System of Rice Intensification (SRI), alternate wetting and drying, and drip irrigation can improve productivity while conserving water and reducing emissions. In addition, remote sensing, satellite monitoring, and mobile-based advisory services are enhancing farmers’ access to weather forecasts, soil health data, and best practices. These tools can support better decision-making and increase resilience to climate variability.

However, the benefits of these technologies are unevenly distributed. Smallholder farmers, who make up the majority of rice producers, often lack the capital, knowledge, or access to adopt new methods. Without targeted support and capacity-building, the technology transition could widen inequalities in the sector. Furthermore, producers who fail to modernize may lose market access as sustainability standards rise, particularly in international markets that increasingly demand traceability and low-emission products. Conversely, those who are willing and able to embrace technology can benefit from reduced costs and enhanced resilience, as well as access to carbon markets, profit from sustainable practices and secure financial support.

Adapting to Climate Transitions for Sustainable Indian Rice

Climate transitions are already reshaping India’s rice sector. From physical climate shocks to shifting regulatory landscapes, stakeholders across the value chain must adapt quickly and strategically. For investors and companies, understanding these dynamics is key to managing risk and identifying opportunities.

Integrating sustainability into operations, supporting smallholder farmer adaptation, and diversifying into resilient crops like millet will be essential. Monitoring policy changes, investing in climate-smart infrastructure, and exploring carbon markets can offer new revenue streams and enhance long-term resilience.

Importantly, partnerships across government, industry, and civil society will be critical. Building resilient supply chains, empowering farmers with education and financial tools, and aligning corporate strategies with national sustainability goals will determine the sector’s ability to thrive. By embracing innovation, supporting inclusive transitions, and navigating complex policy environments, India’s rice sector can remain a cornerstone of food security and a model for climate-resilient agriculture in the years to come.