India, the world’s biggest rice exporter, is confident its rice trade with Iran can withstand the threat of tougher US sanctions, with shipments continuing despite higher prices and months of war-related disruption.Rice accounts for nearly two-thirds of India’s $1.25 billion exports to Iran in the financial year ended March, according to government data. Iran, meanwhile, accounted for about 7% of India’s $11.5 billion global rice exports.Demand from Iran has remained firm despite the disruptions, with the country continuing to purchase rice for “food security reasons”, according to Ajay Bhalothia, general secretary of the All India Rice Exporters Association, as quoted by Bloomberg.Bhalothia said he was confident the trade would continue uninterrupted even after US President Donald Trump’s administration announced sanctions on more than 60 entities on Monday and warned that countries doing business with Iran could also face economic punishment.
Iran bought over 1 million tonnes of rice
Iran imported more than 1 million tonnes of rice in the last financial year, up 17% from the previous year, government data showed, according to Bloomberg.Indian exporters said the essential nature of rice as a staple food, along with limited alternative suppliers, could help sustain the tradeRice is widely consumed in Iran in dishes including chelow, which is served with kebabs and stews, and tahdig, the crispy rice crust formed at the bottom of a pot.Iran was India’s second-largest basmati market by volume during the year, behind Saudi Arabia.
Exporters use alternative payment channels
Indian traders have been using financial channels in the UAE, Germany and China, and more recently Turkey, to settle payments for trade with Iran rather than transacting directly with Iranian banks, Bhalothia said.These channels have continued to operate without disruption so far, he added.The payment route is significant as Indian exporters have faced concerns over banking and shipping restrictions linked to sanctions on Iran.As per an earlier Reuters report, exporters had warned that planned new US sanctions and the UAE’s suspension of trade and financial transactions with Iran could disrupt Indian exports of rice, tea and pharmaceuticals, much of which had been routed through Dubai.In the first half of 2026, India exported $383.11 million worth of rice to Iran.Indian exporters said Turkey was being explored as an alternative route for transactions after the UAE suspended trade activities, exchanges and financial transactions with Iran until further notice.Other major Indian exports to Iran include pharmaceuticals, tea, bananas, cereals, bovine meat and some chemicals. Exporters cited the humanitarian nature of these goods and limited alternative suppliers in arguing that these shipments were also unlikely to be disrupted.
India has not regularly bought Iranian crude since 2019
While India remains a significant supplier of food and other goods to Iran, its crude oil imports from the country have largely stopped.India has not imported crude from Iran since 2019, apart from a small window that opened this year following US waivers. Before US sanctions were imposed on Iran, Tehran was among India’s major oil suppliers.“Indian exports to Iran shouldn’t get impacted,” said SC Ralhan, president of the Federation of Indian Export Organisations, according to Bloomberg.However, Ralhan said that while exports to Iran were not substantial for India overall, “the government should immediately intervene on humanitarian grounds with some arrangement to help exporters.”Exporters were concerned that prolonged disruption could increase freight, insurance and payment costs, particularly for the basmati industry.The broader India-Iran trade relationship has already declined sharply from its 2018-19 levels.Bilateral trade had fallen by more than 90% from its 2018-19 peak of $17 billion, with Indian exports now largely concentrated on goods covered by humanitarian exemptions.
