India's exports to Iran set to fall further due to Dubai halt, US sanctions

India's exports to Iran, including rice, tea and pharmaceuticals, are set to face further declines due to recent actions taken by the United States and the United Arab Emirates. The planned new U.S. sanctions on Iran, combined with the UAE's halt on Tehran trade, could cause significant disruption to Indian exports through Dubai's port.

In the past, India was among Iran's top five trading partners, with bilateral trade peaking at $17 billion in 2018/19. However, exports have fallen by more than 90% to $383.11 million in the first half of 2026, largely limited to goods exempted on humanitarian grounds.

Exporters fear that President Donald Trump's proposed economic D-Day plan, expected to be unveiled later on Monday, could further weaken the already strained trade situation. The UAE's suspension of all trade activities, exchanges and financial transactions with Iran until further notice has already prompted some transactions to explore alternative jurisdictions, with Turkey being mentioned as a potential alternative.

Indian exporters anticipate higher freight and other costs, making it more challenging to maintain current levels of exports. In the rice industry, which is India's second-largest overseas market for premium basmati rice, any prolonged disruption could have a more substantial impact on millers and exporters in northern India compared to the country's overall non-basmati rice trade.

Although tea exports to Iran totaled $14.34 million in the first half of 2026, the sales are expected to be affected due to their passage through the UAE. Exporters are concerned that payment problems may worsen, adding to the challenges faced by Indian exporters.