Basmati Exports to Iran Slow as Tariff Threats Roil Trade

India’s basmati rice exports to Iran have slowed to a near standstill as concerns over a 25% tariff on Tehran’s trading partners and existing 50% duties on Indian goods shrink appetite for new deals. Exporters fear non-payment and potential extra tariffs as the dispute unfolds, prompting cautious contracting with Iranian buyers. The trade dynamic is tight: basmati remains India’s flagship export to Iran within a broader basket including tea, sugar, and pharmaceuticals, while Iran imported fruits and other goods from India.

Trade between the two economies has tumbled since the high of 2018-19, when the pair traded around $17 billion. The latest figures show a dramatic decline, with 2024-25 trade at about $1.68 billion and India accounting for most exports. In the current turmoil, buyers have reported delays and, in some cases, failures to remit full payments, complicating shipments already hampered by unsettled logistics.

With payments stuck and links disrupted, more than ₹2,000 crore of exporters’ money remains at risk as shipments stall. Basmati prices have come under pressure, slipping ₹5-7 per kg in a week, as Iran—one of India’s key basmati markets—experiences port delays and stockpiles at Indian and Iranian ports amid ongoing protests. Industry observers warn that if the crisis persists, prices could fall sharply, potentially by 30-40%, echoing past Iran-related disruptions.

Though India’s overall trade with Iran remains a small share of its total commerce, the situation underscores how geopolitics can ripple through global food supply chains. Authorities have argued that U.S. tariffs will have limited impact on India given the scale of bilateral trade, yet exporters say clarity on payments and policy signals is urgently needed to restore confidence.

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