Rice hybrids are known to withstand moisture deficit stress better than their parental purelines. To study the effect of water deficit stress in rice hybrids, in terms of productivity related traits and physiological parameters pertaining to drought stress, 22 rice hybrids and their parental lines were evaluated under well irrigated and water deficit conditions. Sixteen F1 hybrids showed positive heterosis over their respective mid-parental means for yield and spikelet fertility. Pusa 6A and Vandana was the best cross combination for developing high yielding hybrid rice varieties under drought since they had the highest positive standard heterosis and heterobeltiosis for grain yield, spikelet fertility and membrane stability index (MSI). Among the physiological parameters, MSI was found to reflect the drought tolerance ability of a genotype (pureline/hybrid) better. A set of 60 genome-wide SSR markers were used for prediction of heterotic potential of genotypes under well irrigated and water deficit conditions which revealed that genetic distances and spikelet fertility had a positive and significant correlation. © 2016, Indian Society of Genetics and Plant Breeding. All rights reserved.