The escalating political and civil crisis in Iran is causing significant disruption to Indian exports, leaving consignments worth over ₹2,000 crore stranded at Indian ports and raising concerns among traders about payments, logistics, and future trade prospects. The turmoil comes amid protests against Iran’s ruling clergy and the looming threat of 25% tariffs from the US on countries doing business with Tehran, analysts said.

Stranded Shipments and Market Fallout

Indian exporters report that basmati rice, tea, and pharmaceutical products bound for Iran are currently on hold at ports such as Kandla and Mundra. The delay is a result of both disrupted operations in Iran and traders’ caution amid volatile currency and payment channels.

Prem Garg, president of the Indian Rice Exporters’ Federation, highlighted the impact on basmati rice: “Iran has historically been a pillar market for Indian basmati. However, the current internal turmoil has disrupted trade channels, slowed payments, and dented buyer confidence. The immediate fallout is evident in Indian mandis, where basmati prices have softened sharply.”

Local basmati prices have already begun to drop due to uncertainty over shipments, while agricultural exporters worry about cash flow and the potential loss of market share to competitors.

Iran: A Key Market for Indian Exports

Iran is one of the largest buyers of Indian basmati rice, second only to Saudi Arabia. The country imports around 12 lakh tonnes annually, valued at over ₹12,000 crore, making it a critical market for India’s agricultural exports. Beyond rice, India also exports tea, pharmaceutical products, and other goods to the country.

Despite a total bilateral trade of under $4 billion annually, disruptions in this trade corridor can have significant economic and price impacts domestically, especially for rice farmers and exporters who rely on predictable demand from Iran.

US Tariff Threat and Its Implications

The trade disruption is further exacerbated by US President Donald Trump’s threat to impose a 25% tariff on countries engaging in business with Iran. The US has not yet provided detailed guidelines on the scope of this levy, but its announcement has already created uncertainty in Indian trading circles.

Analysts warn that the combination of civil unrest in Iran and the potential US tariff could slow down trade flows, depress commodity prices in India, and disrupt long-term export planning.

Impact on Strategic Trade Routes

India also operates the Chabahar port in Iran’s southwestern coast, a strategically located gateway crucial for trade and regional connectivity. The unrest in Iran, coupled with potential US sanctions, could impact India’s use of Chabahar for the transit of goods, undermining the benefits of the long-term agreement signed with Iran last year.

The situation has also affected oil prices, with Brent crude rising above $64 per barrel, the highest since November, due to concerns over Middle East stability. This spike in crude prices could affect India’s import bill, given its dependence on imported oil.

Exporters’ Response

Indian traders have paused shipments until the situation stabilises. Payments from Iranian buyers have slowed, and currency volatility has made transactions riskier. Several exporters have indicated that they will wait for clarity on the US tariff and the security situation in Iran before moving consignments.

Prem Garg emphasised the urgency: “If these issues continue, Indian exporters risk both financial loss and long-term erosion of their market presence in Iran.”

Looking Ahead

The combined impact of internal unrest in Iran, the threat of US tariffs, and payment disruptions could have far-reaching consequences for India’s trade with the country. Authorities from the commerce ministry are monitoring the situation closely, and exporters are seeking guidance on navigating the evolving geopolitical and financial risks.

For now, consignments remain stranded at Kandla and Mundra ports, with both traders and government officials hoping for a resolution that allows trade to resume smoothly. The outcome of the crisis in Iran will likely dictate prices for basmati rice and other exports in India over the coming months.

In summary, the Iran crisis has created a multi-layered challenge for Indian exporters: stranded shipments, falling domestic prices, uncertainty over payments, and potential US tariffs, all of which could reshape India-Iran trade dynamics in the near term.