Stricter US sanctions on Iran are unlikely to hit local exports as the Persian Gulf nation’s bilateral trade with India is largely limited to pharmaceuticals and agricultural commodities, led by basmati rice.
Rice accounted for $810.08 million of the $1.25 billion in exports to Iran in the financial year ended March, government data showed. That compares with India’s $11.5 billion worth of overall exports of the staple during the year.
ALSO READ | Trump will have to risk pain to make new Iran sanctions truly bite
Demand from Iran also held up despite higher prices and months of disruption from the war, according to Ajay Bhalothia, general secretary of the All India Rice Exporters Association.
Exporters shipped almost 60% of basmati rice production to Iran and a few other nations in the Middle East since the US-Iran war began, Bhalothia said. While the price has only gone up, Iranians have been buying for “food security reasons,” he said.
ALSO READ | 'Economic D-Day': US announces expansion of sanctions in 'onslaught' on Iran
Tehran purchased over 1 million tons of rice in the fiscal year ended March, up from 855,132 tons a year before, government data shows.
US President Donald Trump’s administration on Monday unveiled sanctions against more than 60 entities, and threatened economic punishment against any country doing business with Iran.
Yet, importers and exporters have developed payment networks in Dubai and the wider United Arab Emirates, Germany, China and most recently Turkey, according to Bhalothia. These transactions have not faced disruptions so far, he said.
Other key Indian shipments to Iran include pharmaceuticals, tea, bananas, cereals, bovine meat and some chemicals. Even these are unlikely to be disrupted, exporters say, citing humanitarian exception and limited alternatives.
Meanwhile, India hasn’t imported any crude from Iran since 2019, except for a small window that opened up this year due to US waivers. Before the US sanctions on Iran, India had longstanding ties with the nation, with Tehran among its biggest oil suppliers.
