'Rice exporters likely to be hit hard': How US sanctions on Iran could hurt India

The US sanctions on Iran could put fresh pressure on India's trade with Tehran, and Indian rice exporters could be among the hardest hit.

The risk has grown after the United Arab Emirates suspended all trade activities, commercial exchanges, and financial transactions with Iran last week. The UAE has been a key route for Indian exports to Iran, including rice, tea, and pharmaceuticals.

On Monday, Treasury Secretary Scott Bessent announced a new round of sanctions against Iran. He warned countries doing business with Tehran to sever their financial ties or face retaliation from Washington.

The move came after US President Donald Trump pledged to unleash an "economic D-Day" against Iran. Washington says the sanctions are aimed at further isolating an Iranian economy already weakened by earlier sanctions and a US naval blockade.

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Why Rice Exports Are At Risk

India exported $383.11 million worth of rice to Iran in the first half of 2026, Reuters reported on Monday. Iran is the second-largest overseas market for Indian premium rice, including long-grained basmati.

Geostrategist Brahma Chellaney on Tuesday said that the Trump administration's attempt to strangle Iran economically through newly announced secondary sanctions hinges on securing China's cooperation.

Beijing, he added, has long defied US sanctions on Tehran, emerging as Iran's largest trading partner and foreign investor, as well as the near-exclusive buyer of heavily discounted Iranian oil.

"By contrast, India is likely to fall in line with the latest US sanctions, as it has repeatedly done in the past. It halted all imports of Iranian crude in 2019 and sharply reduced purchases of Russian oil from last October until Trump’s launch of the war on Iran shut down the Strait of Hormuz."

Chellaney then said that Indian rice exporters are likely to be the hardest-hit: "Such exports to Iran alone totaled nearly $400 million in the first half of this year."

According to Reuters, Dev Garg, Vice President of the Indian Rice Exporters Federation, said any prolonged disruption to the India-UAE-Iran trade corridor would have a much bigger impact on the basmati industry than on India's overall non-basmati rice trade.

The impact could be particularly sharp for millers and exporters in northern India.

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How The UAE Matters

Indian exporters have typically received payments through an Indian authorised-dealer bank from a UAE trader's account. Payments could be made in dirhams, dollars, or another permitted currency.

The UAE trader would then separately collect payment from its Iranian customer through legally compliant banking channels.

That system is now under strain.

"We are already seeing indications that transactions and payment mechanisms traditionally routed through the UAE are exploring alternative jurisdictions," Garg was quoted as saying.

He suggested Turkey as one possible alternative.

Exporters are also concerned that they could face higher freight and other costs if the existing trade route remains disrupted.

Tea And Other Exports Could Also Suffer

India's tea exports to Iran totalled $14.34 million in the first half of 2026.

Prabhat Bezboruah, a senior tea planter and former chairman of the state-run Tea Board, said tea sales to Iran would also be affected because much of the trade passes through the UAE, Reuters reported.

India has been among Iran's five largest trading partners. But bilateral trade has fallen more than 90% from its 2018-19 peak of $17 billion.

Trade is now largely limited to goods exempted from sanctions.

Bessent said Trump had been calling world leaders to ask them to stop dealing with Iran and that the administration had already seen results.

China, Turkey, and the UAE are Iran's largest trade partners.