U.S. President Donald Trump has slapped a 25% tariff on countries trading with Iran. This directly implies that tariffs on India could now soar to 75%, up from the earlier figure of 50%, as India exports multiple commodities, including rice, to Iran. Despite Trump's announcement, shares of rice exporting companies have seen a remarkable rise, although indexes like Nifty and Sensex showed some downturn.
In a statement on Truth Social, President Trump declared that effective immediately, any nation conducting business with the Islamic Republic of Iran would be subjected to a 25% duty on all types of trade with the United States. This order is deemed final. American importers bringing goods from these countries will be responsible for paying the said tariff.
Notable Surge in These Stocks
Shares of Daawat brand exporter LT Foods Limited surged by over 4% to reach 366.75 INR, boasting a market capitalization of 12,700 crore INR. Meanwhile, the shares of KRBL Limited, the parent company of India Gate Basmati Rice, climbed by over 3.35% to 363 INR, holding a market cap of 8,250 crore INR.
On Tuesday, shares of AWL Agri Business Ltd increased by more than 2% to 225.50 INR, raising its market valuation to approximately 29,000 crore INR. Shares of GRM Overseas Ltd soared by over 8% from their day's low, whereas other penny stocks like HMA Agro Products Ltd and Sarveshwar Foods Ltd noted a dip of up to 2%.
Why the Surge After Tariffs? Although the U.S. represents a smaller yet significant market for India's rice, fiscal year 2024 saw India exporting about 234,000 tons of rice to the U.S., which is less than 5% of its global Basmati exports. Prevailing opinion among rice traders suggests that the tariff increase does not pose a major concern. Due to the market's limited size, diversification is seen as a feasible option for exporters.
Iran ranks among the largest consumers of Indian Basmati rice. In fiscal year 2025, India exported nearly 850,000 tons of Basmati rice to Iran, establishing it as a key buyer following Saudi Arabia and Iraq. Iran accounted for approximately 12-20% of India's total Basmati rice exports. In fiscal year 2025, India’s total rice exports reached 21.55 million metric tons, marking a 19.4% growth from the previous year.
Radhika Rao, Executive Director and Senior Economist at DBS Bank, indicated that post the extensive global sanctions followed by 2018-19, the volume of total goods trade with Iran has sharply declined to below 0.5%.
How Large is the Trade with Iran?
India's exports to Iran are estimated to fall below 2 billion USD, covering rice, oil, tea, spices, pharmaceuticals, meat, and dairy products. On the flip side, the sharp depreciation of Iran’s Rial and payment delays have significantly impacted India's exports of Basmati rice, leading to a substantial number of shipments worth approximately 2,000 crore INR being stalled at major ports like Kandla and Mundra, as per the Indian Rice Exporters Federation.
