New Delhi: India's basmati rice trade with Iran now faces fresh uncertainty. The United States has threatened a 25% tariff on countries that trade with Tehran. This development threatens to disrupt exports and has prompted the commerce ministry to step in.
Ministry to Hold Consultations with Exporters
The commerce ministry will hold consultations with exporters. The goal is to assess the impact and safeguard shipments to Iran. Two people familiar with the matter confirmed this development. The date of the meeting is yet to be finalized.
Iran stands as India's third-largest market for its famed basmati rice. During April–November 2025, India exported 599,000 tonnes worth $468.1 million to Iran.
Exporters Grapple with Lack of Clarity
Exporters say the lack of clarity creates major difficulties. It is unclear whether the tariff would apply only to US-bound goods or also to India-Iran trade. This makes it difficult to price contracts and plan shipments.
The situation is especially challenging because India already faces a 50% US tariff on some exports. That tariff took effect from 27 August 2025.
The ministry's meeting will focus on understanding exporters' concerns. It will also discuss measures to ensure continuity of shipments, said the first of the two persons cited.
"Basmati rice exporters lack clarity on the proposed new US tariff," said Satish Goel, president of the All India Rice Exporters Association (Airea). "We will meet commerce ministry officials handling agricultural exports to seek clarity on the issue."
The Agricultural and Processed Food Products Export Development Authority (Apeda) is the commerce ministry arm that addresses exporters' concerns. It does this through policy interventions from time to time.
Impact on Business and Trade Routes
While Iran remains a top destination for Indian basmati, sanctions and tighter market restrictions have considerably impacted business. Many traders have been routing this trade through other channels for some time.
"Considering the limited direct trade with Iran, we have been conducting the majority of our trade through the UAE," said Akshay Gupta, head of bulk exports at KRBL Ltd. KRBL is a major basmati rice firm that owns brands including India Gate. "Iranian importers operate locally in the UAE. This arrangement has helped us mitigate risks."
"However, the fresh US tariff threat, including the proposed 25% levy, adds an additional challenge for the Indian basmati rice sector," Gupta added.
According to Goel of Airea, nearly one-third of Indian shipments are routed through Dubai. Iranian importers have set up their offices there.
Unrest in Iran Compounds Challenges
Asked about the impact of escalating civil unrest and widespread protests in Iran on exports, Goel said, "It is too early to say anything on it. Basmati shipments have been on hold from the last 7-8 days. We have been assured it will start again from 20 January."
Exporters said payment risks have increased amid the ongoing unrest and communication disruptions in Iran. This compounds the uncertainty created by tariff-related concerns.
"Exporters are facing payment delays," said Pankaj Goel, vice-president of the All India Rice Exporters Association. "But it is difficult at this stage to quantify the amount stuck in trade due to the unrest and internet shutdown."
In Iran, nationwide protests began late December over dire economic conditions. They have escalated into the largest anti-government demonstrations since 1979. Security forces met the protests with a severe crackdown. Rights groups say this has killed over 2,500 people and led to tens of thousands of arrests. A wide internet blackout is also in effect, according to an AP report.
Experts Call for Continuous Engagement
Agriculture experts say the situation calls for continued engagement between the government and the industry. This is needed amid the tariff-related uncertainty.
"Given the lack of clarity on the proposed US tariff and its scope, exporters need policy guidance," said Binod Anand, an agriculture expert and a member of the government's committee on minimum support prices. "This is to avoid disruption to ongoing contracts. The consultations with the commerce ministry will be important. They will help assess risks and ensure continuity of basmati rice exports."
Queries sent to the commerce ministry and Apeda on 14 January remained unanswered till press time.
Trade Data and Broader Export Picture
As per commerce ministry data, India's total export of goods to Iran during April-October, the first seven months of FY26, stood at $693 million. Imports were valued at $177 million.
India's trade with Iran remains modest but steady. In FY25, exports were $1.24 billion and imports were $441.8 million. In FY24, exports were at $1.22 billion and imports at $625 million.
Besides basmati rice, India exports a range of agricultural and industrial products to Iran. In FY25, the shipments included several key items:
- Fruits and nuts ($55.91 million)
- Tea, coffee and spice products ($70 million)
- Sugar and related confectionery ($14.5 million)
- Organic chemicals ($29.27 million)
- Pharmaceutical products ($28.29 million)
- Animal feed and fodder products ($71 million)
- Personal care and cosmetic items ($25.71 million)
The coming weeks will be crucial for India's basmati rice trade with Iran. The commerce ministry's consultations and the clarity they provide will shape the future of this important export relationship.
