India appears unfazed by the United States' recent announcement of a 25% tariff on countries that continue to trade with Iran, anticipating minimal impact due to the already limited trade between the two nations since 2019. The tariff announcement was made by former US President Donald Trump on January 13, 2026, through a post on Truth Social.
India's trade with Iran has significantly declined since 2019, primarily due to the reimposition of US sanctions on Iran. Bilateral trade, which peaked at US$17.03 billion in the financial year 2018-19, drastically reduced to US$4.77 billion in FY20. This decline was largely due to the cessation of oil imports from Iran following the lapse of the oil sanction waiver granted to India by the US.
Government sources indicate that Iran does not even rank among India's top 50 trading partners. Last year, the total trade between the two countries was approximately $1.6 billion, which constitutes a mere 0.15% of India's overall trade. This figure is expected to decrease further due to prevailing economic factors. In 2019, trade between India and Iran stood at $17.6 billion, but by 2024, it had plummeted to $2.3 billion, marking an 87% decrease.
India's exports to Iran have also experienced a significant decline, falling by 68% from 2018 levels. In 2019, India exported goods worth $3.9 billion, which decreased to $1.3 billion by 2024. The reduction in exports reflects the overall uncertainty in trade and the challenges posed by international banking restrictions and payment channels.
Despite the overall decline, certain sectors could experience temporary impacts. Basmati rice constitutes a major portion of India's exports to Iran, accounting for 61% of the total. Iran also imports notable quantities of tea, essential oils, and fresh fruits from India. However, even for these commodities, Iran is no longer a critical market for India.
On the import front, the impact is projected to be even smaller. While Iran previously supplied a significant portion of India's crude oil, accounting for nearly 7% in 2012-13, India has not imported crude oil from Iran since 2019-20. Iran's share in India's total imports which was 2.7% in 2016-17, has shrunk to 0.04% as of November 2025. Currently, India's imports from Iran mainly consist of petroleum products (46.6%) and fresh fruits (39.8%).
The Federation of Indian Export Organisations (FIEO) echoed the sentiment of minimal impact, emphasizing that trade with Iran primarily involves humanitarian goods that are exempt from US sanctions. Ajai Sahai, CEO & DG of FIEO, stated that Indian industries and banks only engage with Iran for goods falling outside the scope of US OFAC sanctions.
Some industry representatives have expressed concerns about the sharp depreciation of the Iranian Rial, which could erode consumer purchasing power and jeopardize existing contracts. However, the focus remains on maintaining compliance with US sanctions and leveraging alternative routes, such as trading through the UAE, to mitigate risks.
In conclusion, while the US tariff announcement has raised concerns, India anticipates minimal disruption to its overall trade scenario due to its already reduced trade engagement with Iran since 2019 and the focus on humanitarian goods. The Indian exporting community remains watchful but composed, with a focus on navigating currency risks and seeking government support to enhance long-term export competitiveness.
