Grain exports from the country are facing the heat of the United States attacks on Iraq with all deals with Kuwait and Iraq in the cold storage.

While exports of basmati rice to Kuwait has come to a standstill, two shipments of wheat to Iraq were anchored at Dubai.

With Kuwait being in the frontline of US-led action against Iraq, exporters have decided to play safe. Shipments to the west Asian nation has been stopped in the past 4-5 days.

Traders have decided that would not attempt to ship export consignments there till the war was over. Out of total annual exports of 7-8 lakh (700,000-800,000) tonnes of basmati rice, exports to Kuwait accounted for 50,000 tonnes.

There was a short term implication of this development, traders said. In all likelihood, the disruption would result in prices of the rice dropping by $15-25 per tonne in the domestic market as well as in risk-free overseas markets like east Asia.

Kuwait had been aggressively purchasing its stock of basmati requirement since January as war was imminent. Nonetheless, there was surplus stocks with traders.

Earlier in the year, the drought had led to a lower crop. Basmati prices had climbed to a high of $725-765 per tonne this season.

Prices may be hit over the medium or long-term if the war inside Iraq dragged on and ports in adjoining countries also closed owing to hostile public opinion or military regulation. This would result in a drop in export of basmati.

Export of Indian wheat has also been affected by war. Two shipments of wheat of 17,850 and 4,000 tonnes had been anchored at Dubai till Thursday.

The former had received clearance and could proceed towards Iraq once things settled down. The other shipment was firmly berthed in Dubai.

Exporters in general were wary whether deals would be honoured in this situation and have decided to hold back cargo till the war stopped. Iraq had placed an order for import of six lakh (600,000) tonnes of wheat from India.

If the war was brief, impact on commodity exports would be minimal but if it dragged on for more than 10 days, trade would be affected.

West Asia has emerged as India's largest purchaser of basmati rice and despite Iraq's earlier rejection of Indian wheat on quality grounds, it has the potential of becoming the largest importer of wheat from India.

The same logic would apply to tea, traders said. Iraq had emerged as one of the most important markets for Indian tea. Though the season had started later, exporters were hoping that the war would be short.

The war was also likely to have an indirect impact on exports to other nations. Freight rates for ships were already inching up and this would in turn make exports dearer at the buyer's doorstep.

Commodities like sugar would attract higher freight particularly for export shipments to Egypt and Yemen. Indian producers exported around 25,000 tonnes of sugar to west Asia every month.