US Tariff Strike On Iran To Hit India's $1.7 Bn Trade
The current internal turmoil has disrupted trade channels, slowed payments, and dented buyer confidence. The immediate fallout is evident in Indian mandis, where Basmati prices have softened sharply within days, finds Indian Rice Exporters Federation.
Chennai: US President Donald Trump’s move to impose additional 25 per cent tariffs on countries trading with Iran can affect India’s $1.7 trade with the Middle East country. While exporters are experiencing slower demand due to internal conflict and currency depreciation, industry hopes that the new move may spare food and pharmaceutical supplies to Iran.
Of the total exports of $1.24 billion as in FY25, rice shipments accounted for $757.3 million, oil meals $70.8 million, fruits and vegetables $58.3 million. Exports of inorganic and organic chemicals stood at $56.5 million in FY25, followed by engineering goods valued at $43.3 million, drugs and pharmaceuticals worth $40.7 million, tea worth $37.9 million, and spices valued at $29.1 million.
If the government instructs the industry to stop trade with Iran in order to avoid additional 25 per cent tariffs on US exports, $1.7 billion worth exports and imports will have to be relinquished.
However, the industry hopes that humanitarian goods like food and pharmaceuticals will be kept out of the list.
“We will have to wait for the Executive Order to understand the details of this decision. We hope that food materials like rice, fruits, vegetables, tea and spices as well as pharma will not have to face any restriction. If that be the case, the impact will be much lower,” said Ajay Sahai, director general, FIEO.
Meanwhile, the internal conflict in Iran and currency depreciation are emerging as bigger challenges. Exporters are already facing the heat of slower demand. Basmati rice exports to Iran during April– November 2025–26 stood at $468.10 million against $753 million in FY25.
The current internal turmoil has disrupted trade channels, slowed payments, and dented buyer confidence. The immediate fallout is evident in Indian mandis, where Basmati prices have softened sharply within days, finds Indian Rice Exporters Federation. “Exporters must exercise heightened caution, particularly with respect to credit exposure and shipment timelines,” said Dev Garg, vice president, IREF.
IREF has issued an advisory urging exporters to reassess risk associated with Iranian contracts, adopt secured payment mechanisms, and avoid overleveraging inventories meant exclusively for the Iran market. IREF has also appealed to stakeholders to diversify into alternative markets across West Asia, Africa, and Europe to cushion the impact of any prolonged slowdown in Iran-bound shipments.