Hydrothermal treatment of rice, called “Parboiling”, is an ancient traditional process in Asian countries. It consists of soaking rough rice in water and steaming it, and it both reduces the level of grain breakage and increases head yield of rice during milling. However, parboiling of rice is associated with some drawbacks regarding consumer preferences: the loss of its aroma, reduced rice-kernel whiteness and increased kernel hardness. This research study was carried out to develop a mild hydrothermal treatment that could be applied to basmati paddy by controlling hydrothermal treatment, i.e., soaking water temperature, steaming pressure and time. The Basmati 370 paddy variety was used for this study. The results revealed that, by soaking the paddy in hot water (70 ± 2 °C) for 75 min and steaming the soaked paddy for 20 min with non-pressurized steam at atmospheric pressure, and soaking the paddy for 120 min in hot water (70 ± 2 °C) and steaming the soaked paddy for 4 min with pressurized steam (4 kg/cm2), the optimum treatments are achieved. These optimum hydrothermal treatments were able to produce high head rice yield and preserve the basmati aroma, colour, hardness and palatability characteristics similar to non-parboiled basmati rice. Further, nutritional values such as vitamin B and protein content were also significantly preserved by these mild hydrothermal treatments. These optimized treatment combinations achieved minimized grain breakage while increasing head rice yield during milling and, at the same time, preserved basmati aroma, kernel whiteness, cooking and palatability characteristics similar to non-parboiled rice.