Trump recently stated that any country engaging in trade with Iran would face a 25 per cent tariff on its trade with the United States. The announcement has raised concerns among several of Iran’s trading partners, including India, China and the UAE. 

Apex exporters’ body Federation of Indian Export Organisations (FIEO) has said that US President Donald Trump’s announcement of a 25 per cent duty on countries doing business with Iran is unlikely to have any meaningful impact on India’s trade.

Trump recently stated that any country engaging in trade with Iran would face a 25 per cent tariff on its trade with the United States. The announcement has raised concerns among several of Iran’s trading partners, including India, China and the UAE. However, FIEO clarified that India’s engagement with Iran remains firmly within the framework of US sanctions and is limited to permitted humanitarian trade.

FIEO Director General Ajay Sahai said Indian companies and banks are in full and demonstrable compliance with the Office of Foreign Assets Control (OFAC) sanctions regime. He noted that India’s trade with Iran is largely confined to humanitarian goods such as food items and pharmaceuticals, which are clearly allowed under existing US sanctions. As a result, there is no basis to expect any adverse fallout for Indian trade.

India’s total trade with Iran stood at USD 1.68 billion during 2024-25 (April-March). Of this, exports accounted for USD 1.24 billion, with the bulk coming from the agriculture and allied sectors. Key export items included cereals, animal fodder, tea and coffee, spices, fruits and vegetables, along with pharmaceutical products.

FIEO reiterated that since most of India’s exports to Iran fall outside the scope of US sanctions due to their humanitarian nature, the proposed additional US tariff on Iran-linked trade partners should have almost no impact on Indian exporters. The exporters’ body also pointed out that this position is well understood by US authorities.

The announcement has nevertheless drawn attention as Indian exporters are already under pressure from steep tariffs imposed by the US on several products. In recent months, exporters have been grappling with duties as high as 50 per cent on certain shipments to the American market, adding to cost pressures and uncertainty.

Apart from farm produce and medicines, India also exports rice, tea, sugar, manmade staple fibres, electrical machinery and artificial jewellery to Iran. Imports from Iran mainly consist of dry fruits, organic and inorganic chemicals, and glassware. In 2024-25, India’s merchandise exports to Iran rose by 1.55 per cent, while imports declined sharply by over 29 per cent.

A significant pillar of India-Iran economic ties remains the joint development of the Chabahar port. Located on Iran’s southern coast in the Sistan-Balochistan province, the port is strategically important for enhancing regional connectivity and trade, particularly with Afghanistan and Central Asia.