Disease management with the use of conventional pesticides has emerged as a major threat to the environment and human health. Moreover, the increasing cost of pesticides and their use in staple crops such as rice is not economically sustainable. The present study utilized a combination of two commercial powder formulations of biocontrol agents, Trichoderma harzianum (Th38) and Pseudomonas fluorescens (Pf28) to induce resistance against sheath blight disease via seed biopriming in basmati rice variety Vasumati and compared the performance with systemic fungicide carbendazim. Sheath blight infection significantly increased the levels of stress indicators such as proline (0.8 to 4.25 folds), hydrogen peroxide (0.89 to 1.61 folds), and lipid peroxidation (2.4 to 2.6 folds) in the infected tissues as compared to the healthy control. On the contrary, biopriming with biocontrol formulation (BCF) significantly reduced the level of stress markers, and substantially enhanced the levels of defense enzymes such as peroxidase (1.04 to 1.18 folds), phenylalanine ammonia lyase (1.02 to 1.17 folds), lipoxygenase (1.2 to 1.6 folds), and total phenolics (74% to 83%) as compared to the infected control. Besides, improved photosynthesis (48% to 59%) and nitrate reductase activity (21% to 42%) showed a positive effect on yield and biomass, which compensated disease induced losses in bio-primed plants. Conversely, the comparative analysis of the efficacy levels of BCF with carbendazim revealed BCF as a potential and eco-friendly alternative for reducing disease impact and maintaining higher yield in rice under sheath blight infection.