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

Indian exporters warn that planned new US sanctions on Iran and the UAE halting trade with Tehran could significantly disrupt Indian exports of rice, tea, and pharmaceuticals to Iran. These exports have largely been routed through Dubai's port in recent years. India, once among Iran's five largest trading partners, has seen bilateral trade fall by more than 90% from its 2018/19 highs of $17 billion, with exports now limited to goods exempted on humanitarian grounds.

The UAE recently suspended all trade activities, exchanges, and financial transactions with Iran. Indian exporters, who have seen a decline in trade due to sanctions, banking caution, and shipping constraints, fear that the US's proposed economic D-Day plan could further squeeze trade. The UAE halt on trade with Tehran has led to a shift in transactions and payment mechanisms, with traders exploring alternative jurisdictions.

Indian rice exports to Iran, valued at $383.11 million in the first half of 2026, represent the country's second-largest overseas market for premium rice, including long-grained basmati. Any disruption in this corridor could have a more significant impact on the basmati industry in northern India than on India's overall non-basmati rice trade.