National Capital
Sun, Sep 06, 2026, 20:57
India's exports to Iran expected to drop further after Dubai pause, US sanctions
2026/08/26, 21:27
Fresh U.S. sanctions planned for Iran and the UAE’s suspension of trade with Tehran could significantly hit Indian shipments of rice, tea and pharmaceuticals to Iran, much of which has been routed via Dubai in recent years, exporters said on Monday.
India has ranked among Iran’s top five trading partners, although bilateral trade has plunged by over 90% from the 2018/19 peak of $17 billion, with exports now largely confined to humanitarian-exempt goods.
Exporters in India are concerned that U.S. President Donald Trump’s proposed “economic D-Day” package, expected to be announced later on Monday, may tighten an already constrained trading environment shaped by sanctions, cautious banks and shipping limitations.
The United Arab Emirates last week halted all trade operations, exchanges and financial transactions with Iran until further notice.
“We are already seeing signs that transactions and payment routes traditionally run through the UAE are looking at other jurisdictions,” said Dev Garg, vice president of the Indian Rice Exporters Federation, pointing to Turkey as a possible alternative.
Exporters could face higher freight and other costs
During the first half of 2026, India shipped $383.11 million worth of rice to Iran, making it the second-largest overseas destination for premium rice, including long-grain basmati.
“Any extended interruption in this corridor will matter far more for the basmati business — particularly millers and exporters in northern India — than for India’s overall non-basmati rice trade,” Garg said.
Until recently, exporters in India typically received payment via an Indian authorised-dealer bank from the account of a UAE trader — in dirhams, dollars or another allowed currency — while the trader separately collected funds from the Iranian buyer through legally compliant banking channels.
Indian tea exports to Iran amounted to $14.34 million in the first half of 2026. Prabhat Bezboruah, a senior tea planter and former chairman of the state-run Tea Board, said sales to Iran will take a hit because a significant share moves through the UAE.
There was no immediate response from India’s trade and foreign ministries.
A New Delhi-based exporter said direct shipments might increase, but payment-related difficulties could intensify.
Ajay Srivastava of the Global Trade Research Initiative said India’s trade with Iran has already contracted sharply under earlier sanctions.
“We hope food and pharmaceutical items may be exempted, but exporters could still end up paying more for freight, insurance and settlement of payments,” he said.
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