Indian exports face little risk from tougher US sanctions on Iran
Stricter US sanctions on Iran are unlikely to significantly affect India’s exports to the country, as bilateral trade is mainly concentrated in pharmaceuticals and agricultural products, particularly basmati rice.
Recent stricter sanctions imposed by the United States on Iran do not appear to pose significant risks to India's exports to the Persian Gulf nation, according to recent reports. India's bilateral trade with Iran primarily involves pharmaceuticals and agricultural commodities, with basmati rice being the most notable export. In the financial year ending March, basmati rice contributed $810.08 million out of India's total $1.25 billion exports to Iran. On the other hand, India's overall exports to Iran amounted to $11.5 billion.
Even with higher prices and ongoing disruptions caused by the war, demand from Iran remained robust, as noted by Ajay Bhalothia, general secretary of the All India Rice Exporters Association. Exports of basmati rice to Iran and other Middle Eastern countries accounted for nearly 60% of the total basmati rice production. Despite the overall increase in rice prices, Iranians have continued purchasing it primarily due to food security concerns.
Iran has been buying over 1 million tons of rice in the fiscal year that ended in March, up from 855,132 tons in the previous year, as per government data. The sanctions issued by the Trump administration on Monday targeted over 60 entities and threatened economic punishment against any country engaging in business with Iran. However, importers and exporters in India have established alternative payment networks in Dubai, the UAE, Germany, China, and Turkey, which have not faced any disruptions so far.
Apart from basmati rice, other key Indian shipments to Iran include pharmaceuticals, tea, bananas, cereals, bovine meat, and certain chemicals. These exports are expected to remain unaffected due to humanitarian exemptions and limited alternatives. Moreover, India has not imported any crude oil from Iran since 2019, except for a limited period this year granted by US waivers. Prior to the implementation of US sanctions on Iran, India maintained close ties with the nation, with Tehran amongst its largest oil suppliers.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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