Declining trade
Source: Commerce and Industry Ministry
Official data shows that direct bilateral goods trade between India and Iran was worth nearly $1.6 billion in FY25, dramatically lower compared to pre-Covid levels when the total trade stood at nearly $15 billion, largely driven by crude imports from Iran which stopped in early FY20.
In FY19, Iranian crude exports to India stood at $12 billion and exports neared $4 billion. This was despite Iran being thrown out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) banking system in 2011, as both countries managed trade via a Vostro account. A Vostro account is typically maintained by a domestic bank on behalf of a foreign bank, in the domestic currency, to facilitate settlement of cross-border transactions.
India has not imported any Iranian oil since May-June of 2019, when the sanctions waiver given by the US to India and a few other countries expired.
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Iran used to be India’s second-largest crude oil supplier before New Delhi significantly cut oil imports from Tehran between 2012 and 2015 amid targeted US sanctions.
Then, following the 2015 Iran nuclear deal — Joint Comprehensive Plan of Action (JCPOA) — inked between Iran and the US, UK, France, Germany, China, Russia and the European Union, international sanctions on Iran’s petroleum sector were eased. This led to Indian refiners ramping up oil imports from Iran from early 2019, and Tehran reclaimed its position as a top source of crude for India within a few months. But in 2018, the first Trump administration walked away from the JCPOA, leading to re-imposition of US sanctions on Iran, forcing India to wind down and stop imports of Iranian oil by the summer of 2019.
However, the US Office of Foreign Assets Control (OFAC) imposed product-specific sanctions in 2019, further curtailing trade with India.
Tea exporters stated that Iran has traditionally been a strong market for Indian orthodox tea, and the tariffs could exacerbate the restrictions that tea exporters are facing in other markets, such as Pakistan and Russia, which were once large markets for Indian tea.
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Data showed that the top export items to Iran included cereals worth $757.52 million, tea, coffee, and spices worth $70 million, animal fodder worth $71 million, and fruits and nuts worth $55 million in 2024-25.
India’s investment in Chabahar port
Beyond trade, India has considerable investments in the Chabahar port due to its strategic importance. The Chabahar port serves as the closest route to Afghanistan, Central Asia, and Europe amid strained ties with Pakistan. According to the Ministry of External Affairs (MEA), India has already supplied port equipment worth about $24 million to develop the Chabahar Port till 2024.
In 2018, an Indian company, India Ports Global Limited, through its wholly owned subsidiary, India Ports Global Chabahar Free Zone, took over the operations of Chabahar Port and in 2024, IPGL signed a ten-year contract with the Ports and Maritime Organisation of Iran for equipping and operating the Shahid Beheshti Terminal of Chabahar Port.
“The grant assistance for the supply of equipment has been enhanced to $120 million. India has also committed to providing a Line of Credit of $250 million in rupee equivalent for the development of Chabahar Port. Since 2018, the port has handled over 450 vessels, 1,34,082 TEUs (Twenty-foot Equivalent) of containerised cargo and more than 8.7 million tons of bulk and general cargo,” the MEA said.
Iranian protests
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At least 544 people have been killed during the demonstrations over the past 15 days, including eight children, according to an update from the Human Rights Activist New Agency (HRANA), the news service of the organisation Human Rights Activists in Iran.
Protests began on December 28 after the Iranian rial collapsed and prices surged, hitting living costs. The demonstrations quickly spread across the country and turned into direct challenges to Iran’s clerical leadership. Trump had earlier warned that the US could respond if Iranian forces continued to use violence against protesters.
The protests began on December 28 over the collapse of the Iranian rial, which is trading at over 1.4 million to the dollar, as Iran’s economy remains squeezed by international sanctions linked in part to its nuclear programme, AP reported. What started as economic anger has since evolved into direct challenges to the country’s theocratic system.
Air travel has also been affected. Austrian Airlines said Saturday it would suspend flights to Iran through Monday “as a precautionary measure,” while Turkish Airlines earlier cancelled 17 flights to three Iranian cities.
