The ripples of any event in the United States are often felt in India too. Recently, Donald Trump's announcement regarding Iran stirred up dust far beyond US borders. When the American President declared a 25% tariff on countries trading with Iran, tensions soared across the globe. Nations like China, UAE, Turkey, among others, along with India, have found themselves entangled in this scenario. The consequences have been especially pronounced on the export of Basmati rice from India, a trade valued at approximately ₹12,000 crore annually with Iran.
Major Impact of 25% Tariff Announcement!
The announcement of a 25% tariff on trade partners dealing with Iran by Donald Trump has negatively impacted the export of India's Basmati rice. Reports suggest the trade has come to a near standstill. The US action, coupled with protests in Iran, has resulted in significant turmoil in this sector. India, traditionally one of the primary Basmati rice suppliers to Iran, accounts for nearly two-thirds of Iran's total rice consumption.
Reports indicate that the export of Basmati rice from India to Iran has nearly halted. This situation arose following the announcement by US President Donald Trump imposing a 25% tariff on Iran's trade partners.
Source: aajtak
Why Is There a Crisis for Rice Exporters?
The action by Trump is a significant blow to Indian Basmati rice exporters, especially since the US already imposes a high 50% tariff on Indian goods. According to Reuters, suppliers are wary of new deals due to non-payments and the fear of additional tariffs, and are hesitant to sign new agreements with Iranian buyers.
Turmoil in Iran, How to Fulfill Agreements?
Vice President of the Indian Rice Exporters Federation (IREF), Dev Garg, remarked that Iranian importers, citing ongoing unrest in their country, have expressed their inability to honor current agreements and send payments to India. Notably, the Iranian protests have tragically claimed over 2,000 lives.
According to reports, the India-Iran trade volume has diminished from $17.03 billion in 2018-19 to just $1.68 billion in 2024-25. India exports not only Basmati rice but also tea, sugar, fresh fruits, pharmaceuticals, and more to Iran, while Iran imports apples, pistachios, dates, kiwis, and other such items to India.
Source: aajtak
Crisis Threatening ₹12,000 Crore Business
Annually, nearly 1.2 million tons of Basmati rice are exported from India to Iran, valued at around ₹12,000 crore. This significant trade has Punjab and Haryana playing pivotal roles. Even before Trump’s tariff declaration, the unrest had already increased the challenges for exporters. Reports indicate that the Iranian government has even stopped subsidies on imported essentials.
However, the Indian government assures exporters that the impact of the tariff will be minimal. The central government has conveyed to exporters that the Trump 25% tariff will have limited effects on India. With relatively limited trade ties with Iran and a diversified export portfolio with other countries, substantial impacts on India are not anticipated.
