Highlights:
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The United States has announced a 25 per cent tariff on countries that continue trading with Iran
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India is among Iran’s top five trading partners
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Indian exports to the US could face combined tariffs of up to 75 per cent
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Major Indian exports to Iran include basmati rice, tea, sugar, and pharmaceuticals
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India imports methanol, dates, saffron, and petrochemical products from Iran
The United States has signaled a new round of tariffs that could significantly affect India’s trade position, following President Donald Trump’s announcement of a 25 per cent tariff on countries that continue commercial dealings with Iran. The move, aimed at increasing economic pressure on Tehran, has raised concerns about the scale of impact on Indian exports and imports, particularly when combined with existing US trade measures.
According to the Trump administration, the new tariffs are intended to intensify pressure on Iran amid rising political unrest. The measure has been described by the administration as “final and non-negotiable.” While the policy applies broadly to all countries trading with Iran, India stands out as one of the nations most exposed due to its long-standing commercial ties with Tehran.
US Tariffs and India’s Trade Exposure
India has consistently ranked among Iran’s top five trading partners despite years of international sanctions. Data from the Indian Embassy in Tehran shows that bilateral trade between India and Iran during 2024–25 was valued at around $1.68 billion. Of this, Indian exports accounted for approximately $1.24 billion, while imports from Iran were close to $440 million.
The newly proposed tariffs add to an already challenging trade environment for India. The United States has previously imposed a 25 per cent reciprocal tariff on Indian goods. In addition, another 25 per cent duty has been linked to India’s continued purchases of Russian crude oil. If the Iran-related tariffs are enforced alongside these existing measures, certain Indian exports entering the US market could face cumulative tariffs of up to 75 per cent.
Such a level of tariffs would significantly erode price competitiveness for Indian goods in the United States, potentially leading to reduced demand, order cancellations, and long-term loss of market share. Exporters across multiple sectors could be affected, particularly those operating on thin margins.
Tariffs and Indian Exports to Iran
India’s exports to Iran cover a wide range of agricultural and industrial products. Key export categories include organic chemicals, basmati rice, tea, sugar, pharmaceuticals, fruits, pulses, and meat products. India also exports bananas, seasonal fruits, spices, fertilizers, textiles, rubber products, iron and steel, and both agricultural and industrial machinery.
These export flows support a large ecosystem of Indian farmers, small manufacturers, logistics providers, and traders. Higher tariffs linked to Iran trade could disrupt these supply chains, increase compliance costs, and reduce profitability, even if the tariffs are formally applied only on exports to the US.
For exporters who rely on diversified global markets, the risk lies in indirect exposure. Continued trade with Iran could trigger higher tariffs on unrelated exports to the US, forcing Indian companies to reassess long-term contracts and sourcing strategies.
Tariffs, Imports, and Supply Chain Risks
On the import side, India depends on Iran for several important commodities and niche products. Major imports include methanol, petroleum bitumen, liquid propane, apples, dates, and various chemicals. Iran is also a key source of saffron, almonds, pistachios, and other dry fruits consumed widely in India.
For industrial use, India imports acyclic alcohols and petroleum coke from Iran. Crude oil imports from Iran, which were once significant, have fluctuated sharply in recent years due to US sanctions and shifting global energy dynamics.
If tariffs escalate further, Indian importers may face higher transaction costs, longer delivery timelines, and limited supplier options. This could lead to price volatility in domestic markets, particularly for products where Iran is a major or cost-effective supplier.
Strategic and Economic Implications of Tariffs
Beyond immediate trade disruptions, the expanding use of tariffs places India in a complex strategic position. New Delhi has historically maintained a policy of strategic autonomy, balancing relationships with multiple global powers. However, rising tariff pressure from Washington could force India to reassess its trade priorities and diplomatic posture.
The broader concern is that tariffs linked to geopolitical objectives may introduce uncertainty into global trade norms. For Indian businesses, this uncertainty complicates investment planning, contract negotiations, and long-term export strategies.
As the situation develops, Indian policymakers and industry groups are expected to engage with US counterparts to seek clarity on tariff implementation and possible exemptions. However, with the US administration signaling limited flexibility, the risk of sustained high tariffs remains a pressing issue for India’s export-driven sectors.
If enforced, the new tariffs could mark a turning point in India-US trade relations, with long-term consequences for exporters, importers, and the broader economic relationship between the two countries.
