US Imposes Extra Tariffs on Iran Trade: Minimal Impact Expected for India

The United States has announced a 25% tariff on countries continuing to trade with Iran. However, given India’s limited trade with Tehran, the move is unlikely to have any significant impact on the Indian economy. Government sources indicate that the U.S. decision will affect only about 0.15% of India’s total trade.

India-Iran Trade Remains Marginal
Iran does not figure among India’s top 50 global trading partners. Last year, bilateral trade between India and Iran stood at just $1.6 billion, accounting for only 0.15% of India’s overall trade. Analysts expect this figure to decline further in the coming fiscal year.

India’s share in Iran’s total imports is similarly modest. In 2024, Iran’s imports amounted to roughly $68 billion, with the United Arab Emirates leading at 30%, followed by China (26%) and Turkey (16%). The European Union accounted for 9%, while India’s contribution was a mere $1.2 billion—just 2.3% of Iran’s total imports.

Exporters Remain Calm
Indian exporters are exercising caution but are not alarmed. Ajay Sahai, CEO and DG of the Federation of Indian Export Organisations (FIEO), noted that the announcement is “not a major cause for concern.” He added that Indian businesses and banks trade only in goods with Iran that are explicitly outside the jurisdiction of the U.S. Office of Foreign Assets Control (OFAC), which enforces American economic sanctions.

KRBL’s Bulk Exports Head, Akshay Gupta, highlighted that Iran has historically been an important market for Indian Basmati rice. When trade with Iran was fully open, KRBL exported nearly 2.5 lakh tonnes of Basmati rice. However, in recent years, U.S. sanctions and stricter market regulations have reduced this volume significantly.

Trump Tightens the Noose
U.S. President Donald Trump has taken a hard stance on countries trading with Iran. Through a post on Truth Social, he announced that any country continuing commerce with the Islamic Republic would face a 25% tariff on all business dealings with the United States. He described the order as “immediate, final, and decisive,” emphasizing that the directive would take effect immediately.

Government Assesses, Exporters Monitor
Government officials say India’s trade with Iran is already limited, and the new U.S. tariff is unlikely to have major repercussions. Indian authorities are monitoring the situation closely, but exporters currently have little cause for alarm.

In short: While the U.S. has imposed a stringent tariff on Iran-trading nations, India’s limited exposure ensures minimal economic impact, and exporters are cautiously observing the evolving situation.