US tariffs on Iran to have limited impact on India, Centre reassures exporters

The Centre has sought to reassure Indian exporters after the United States announced an additional 25 per cent tariff on major trading partners of Iran, saying the move is unlikely to have a significant impact on India given its relatively limited trade exposure and diversified export linkages.

India’s total trade with Iran stood at around $1.6 billion last year, a small fraction of Iran’s overall import basket of nearly $68 billion in 2024. In comparison, Iran’s largest import partners include the UAE ($21 billion), China ($17 billion), Turkiye ($11 billion) and the European Union ($6 billion), highlighting India’s modest share in Tehran’s trade ecosystem.

Even so, the announcement has unsettled some Indian exporters, particularly in the basmati rice segment, where Iran remains an important destination. India supplies nearly two-thirds of Iran’s rice imports, making the market commercially significant despite the broader geopolitical risks. Following US President Donald Trump’s statement earlier this week, several exporters have grown cautious about signing fresh contracts with Iranian buyers, citing concerns over payment security and delivery risks.

Industry executives say exporters are already grappling with delayed settlements for consignments shipped in recent months, amid financial pressures and domestic unrest in Iran. Some traders have reported difficulties in tracking buyers, while others point to logistical disruptions linked to protests and economic uncertainty.

Akshay Gupta, Head of Bulk Exports at KRBL Ltd, said Iran has historically been a crucial market for Indian basmati rice. “Rice exporters have observed significant consumer demand in this region. When trade with Iran was fully open, KRBL was exporting around 250,000 tonnes of basmati rice to the market,” he said.

However, years of sanctions and tighter market restrictions have reduced exposure sharply. “Today, our current exposure to the Iran market is limited at around $8–10 million and is being managed prudently,” Gupta added.

He noted that much of the trade is now routed through the UAE, where Iranian importers operate locally. “This arrangement has helped us mitigate risks. The re-imposition of US tariffs, including the proposed 25 per cent levy under the Trump framework, adds an additional challenge to the Indian basmati rice sector,” he said.

Government officials maintain that the broader economic impact on India will remain contained, even if certain export segments face short-term pressure. They point to the fact that exporters have steadily diversified markets across West Asia, Africa and Southeast Asia over the past decade, reducing dependence on any single destination.

The tariff move is expected to have a far greater impact on China, Iran’s largest trading partner. According to World Bank data, Iranian exports to China stood at $22 billion in 2022, with fuels accounting for more than half, while imports from China were valued at $15 billion. More recent estimates suggest that China accounted for over 80 per cent of Iran’s shipped oil in 2025, underlining Beijing’s pivotal role in sustaining Tehran’s economy amid sweeping US sanctions aimed at curbing funds for Iran’s nuclear programme.

For India, policymakers say the priority is to ensure exporters remain supported through diplomatic engagement and financial safeguards. While uncertainty will persist in the near term, officials believe that India’s limited trade exposure and growing export diversification will help cushion the impact, allowing businesses to navigate the evolving geopolitical landscape with greater resilience.