The effects of carbon nanoparticle (CNP) on rice variety Swarna (MTU7029) were investigated. CNP induced effects similar to shade avoidance response (SAR) of Arabidopsis, with increase in shoot length, root length, root number, cotyledon area, chlorophyll content and total sugar content in rice seedlings. In mature plants, CNP treatment resulted increase in plant height, number of productive tillers per plant, normalized difference vegetation index, quantum yield and root growth. A total of 320 mg of CNP per plant administered in four doses resulted in improved grain traits such as filled grain rate, 100-grain weight, grain length/width ratio, hulling rate, milling rate and head rice recovery. Seeds from the CNP-treated plants showed increase in amylose, starch and soluble sugar contents compared to controls. Strikingly, CNP treatment showed an average of 17.5% increase in yield per plant. Upon investigation to the molecular mechanism behind CNP induction of SAR, a significant downregulation of phytochrome B transcript was found. Decrease in perception of red wavelengths led to responses similar to SAR. Increase in plant’s internal temperature by 0.5 ºC ± 0.1 ºC was recorded after CNP treatment. We suggest that the internalized CNP aggregates may serve to absorb extra photons thereby increasing the internal temperature of plants. Phytochrome B accounts the hike in internal temperature and initiates a feed-back reduction of its own transcription. We suggest that moderate SAR is beneficial for rice plants to improve agronomic traits and yield. It presents a potential non-transgenic method for improving rice yield by CNP treatment.