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Trump’s Iran sanctions hit India next? Rice, pharma trade explained
From basmati and pharma to Iranian oil and Dubai payment routes, here’s what Washington’s new economic squeeze on Tehran means for India.
Since 2020, India’s trade with Iran has continuously plunged following Washington’s decision to end the sanctions waiver for Tehran’s oil in 2019. (AI-generated image)
The US has launched a sweeping new campaign to isolate Iran economically, warning foreign companies and countries that continue doing business with Tehran that they could face sanctions and lose access to the US financial system. The move could further disrupt Indian exports to Iran, particularly rice, tea and pharmaceuticals.
Iran, meanwhile, has vowed to retaliate against any country that takes part in the US-led “economic outcast” campaign. Treasury Secretary Scott Bessent described the campaign as an unprecedented financial offensive against an adversary, comparing it with the D-Day landings in Normandy.
India-Iran trade collapsed after Washington ended the sanctions waiver for Iranian oil in 2019, although bilateral trade has fluctuated at much lower levels since then.
India-Iran trade has already plunged since 2019
Reports stated that Indian refiners mostly stopped importing Iranian crude to avoid risking access to American markets and the financial system. Data from the Ministry of Commerce showed bilateral trade between New Delhi and Tehran declined by 72 per cent from $17.03 billion in fiscal year 2018-19 to $4.77 billion in fiscal year 2019-20.
Exports have now fallen to more than 90 per cent of total bilateral trade of $1.63 billion in the fiscal year 2025-26, with exports limited mostly to goods exempted on humanitarian grounds.
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World · India · Trade Data
India-Iran trade: from $17bn to $1.6bn
On the Commerce Ministry's figures, India's bilateral trade with Iran has shrunk about 90% since 2018-19.
$17.03B
2018-19 peak
→
−90%
$1.63B
2025-26
Total bilateral trade, by year (US$ bn)
2018-19
17.03
+23.77
2019-20
4.77
−72
2020-21
2.10
−55.85
2021-22
1.91
−9.1
2022-23
2.33
+21.77
2023-24
1.85
−20.7
2024-25
1.68
−8.89
2025-26
1.63
−2.9
Bars scaled to the 2018-19 peak. Growth is year-on-year (%).
Exports vs imports
How exports and imports compare
2018-19
India's exports $3.51B
Imports from Iran $13.53B
2025-26
India's exports $1.25B
Imports from Iran $0.37B
Imports from Iran fell from $13.53B to $0.37B. In 2018-19 imports far outweighed exports; by 2025-26, exports exceeded imports.
Source: Ministry of Commerce and Industry, Government of India.
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Rice, tea and pharma exports face fresh pressure
The recent sanction threat by the United States, which includes the removal of any entity that facilitates money laundering on behalf of Iran from the US dollar system, could critically disrupt Indian exports of tea, rice and pharmaceuticals to Iran, which have been largely routed through Dubai’s port in recent years, Reuters reported, quoting Indian exporters.
India-Iran crude trade remains significant
The immediate concern is rice, particularly basmati. India exported about $383 million worth of rice to Iran in the first half of 2026, according to Reuters. Much of this trade has traditionally been routed through Dubai, making the UAE’s suspension of Iran-related trade and financial transactions a major problem for Indian exporters.
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Iranian crude also remains an important part of the relationship. India imported about $707 million worth of Iranian oil in the first half of 2026, according to Reuters. Those shipments were enabled by a US exemption granted during a ceasefire in the wider West Asia conflict.
The Iranian exports to India also included small shipments of apples, almonds, dates, liquefied petroleum gas, and kiwi fruit. The crude oil imports from Iran were largely enabled after the United States granted an exemption amid a ceasefire in West Asia.
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World · US-Iran · India Focus
US-Iran sanctions: what does it mean for India?
New US sanctions and the UAE's halt on Iran trade threaten Indian exports that have long been routed through Dubai.
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1 · The squeeze tightens
“Operation Economic Outcast”
Washington unveils sweeping new sanctions to sever Iran's economic lifelines, targeting entities in third countries — including the UAE.
.
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2 · The Dubai route jams
UAE halts Iran transactions
The UAE suspends trade and financial transactions with Iran — choking the transit and payment gateway Indian exporters rely on.
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3 · India feels it
Exports — and one oil link — exposed
Rice, tea and pharma shipments routed via Dubai, plus a recently revived oil-import channel, are all at risk.
What India stands to lose · first half of 2026
RICE
Rice
$383.1m exports — Iran is India's 2nd-largest premium-rice market
High
TEA
Tea
$14.3m exports — much of it moves through the UAE
Medium
PHAR
Pharma
Significant humanitarian trade — exempt goods, but routed through Dubai
Payment risk
OIL
Iranian crude oil
$707m imports — revived under a US exemption that may not last
Uncertain
>90%
fall in India-Iran trade from its 2018/19 high of $17bn — today's exports are mostly humanitarian-exempt goods.
Dubai
was the payment bridge: Indian banks were paid from a UAE trader's account, while the trader settled with the Iranian buyer separately.
Risk ratings are an editorial reading of exposure, not official assessments. Trade figures are for the first half of calendar 2026.
Sources: Reuters (via Business Standard, Business Recorder) · US Treasury · Atlantic Council · CBS News. Reporting dated Aug 24, 2026; a developing story.
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US expands sanctions against Iran-linked entities
Notably, the US Treasury Department on Monday issued sanctions against 60 corporations, individuals, and vessels and described them as enablers of the Iranian regime’s “recklessness,” and the list includes several Chinese nationals.
Responding to the development, China has said that it is illegal for its nationals to comply with any unilateral US sanctions, NBC News reported.
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The latest US measures did not target major Chinese financial institutions, despite China being Iran’s most important oil customer, reflecting the potential diplomatic and economic costs of directly confronting Beijing.
© IE Online Media Services Pvt Ltd
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