US tariffs on Iran will have limited impact on India, says Center reassures exporters

The Center sought to reassure Indian exporters after the United States announced additional 25 percent tariffs on Iran’s major trading partners, saying the move was unlikely to have a significant impact on India given its relatively limited trade exposure and diversified export ties.

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 are the United Arab Emirates ($21 billion), China ($17 billion), Turkey ($11 billion) and the European Union ($6 billion), putting highlights India’s modest share in Tehran’s commercial ecosystem.

This announcement nevertheless destabilized certain Indian exporters, particularly in the basmati rice segment, where Iran remains an important destination. India supplies almost two-thirds of Iran’s rice imports, giving this market commercial importance despite broader geopolitical risks. Following US President Donald Trump’s statement earlier this week, several exporters have become cautious about signing new contracts with Iranian buyers, citing concerns over payment security and delivery risks.

Industry executives say exporters are already grappling with delays in settling shipments in recent months amid financial pressures and domestic unrest in Iran. Some retailers have reported difficulty tracking shoppers, while others point to logistical disruptions linked to protests and economic uncertainty.

Akshay Gupta, head of bulk exports at KRBL Ltd, said Iran has always 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 exported around 250,000 tonnes of basmati rice to the market,” he said.

However, years of sanctions and tighter market restrictions have significantly reduced exposure. “Today, our current exposure to the Iranian market is limited to around $8-10 million and is managed cautiously,” Gupta added.

He noted that much of the trade now goes through the United Arab Emirates, where Iranian importers operate locally. “This arrangement has helped us mitigate risks. The reimposition of US tariffs, including the proposed 25 per cent levy under Trump, adds an additional challenge to the Indian basmati rice sector,” he said.

Government officials say the broader economic impact on India will remain contained, even as some export segments face short-term pressures. They highlight the fact that exporters have gradually diversified their markets across West Asia, Africa and Southeast Asia over the past decade, reducing their dependence on a single destination.

The tariff decision is expected to have a much greater impact on China, Iran’s largest trading partner. According to World Bank data, Iranian exports to China were worth $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 more than 80% of the oil shipped by Iran in 2025, underscoring Beijing’s central role in supporting Tehran’s economy amid sweeping U.S. sanctions aimed at cutting funds for Iran’s nuclear program.

For India, policymakers say the priority is to ensure exporters remain supported by diplomatic engagement and financial guarantees. Although uncertainty will persist in the near term, officials believe India’s limited trade exposure and growing export diversification will help mitigate the impact, allowing businesses to navigate a changing geopolitical landscape with greater resilience.