Trump's Iran Tariff Threat Rattles Indian Basmati Rice Exporters

Iran remains one of the largest destinations for Indian Basmati rice, accounting for a significant share of export volumes. However, the proposed tariff, which penalises third countries for trade engagement with Iran, could complicate payment mechanisms, raise transaction risks, and dampen buyer confidence at a time when the market is already under strain.

According to industry data, India's Basmati rice exports to Iran during April-November 2025-26 stood at USD 468.10 million, with shipments of 5.99 lakh metric tonnes. Indian Rice Exporters Federation (IREF) warn that additional geopolitical and economic pressures may further slow order flows and delay shipments, adversely impacting exporters and farmers alike.

IREF has already flagged visible stress in rice trade linked to Iran, citing internal instability and financial disruptions in the country.

Commenting on the situation, Prem Garg, National President, IREF, said, "Iran has historically been a pillar market for Indian Basmati. However, the current internal turmoil there has disrupted trade channels, slowed payments, and impacted buyer confidence. The immediate fallout is visible in Indian mandis, where Basmati prices have softened sharply within days."

Trump's tariff announcement could amplify these challenges by discouraging international banking channels and insurers from facilitating Iran-linked transactions, even for essential commodities such as food. Exporters may be forced to reassess exposure, particularly where shipments are based on deferred or unsecured payments.

Garg further underlined the need for caution, stating, "We are not sounding an alarm, but urging prudence. In times of geopolitical and internal instability, trade becomes the first casualty. A calibrated approach is essential to protect both exporters and farmers. India's rice sector is resilient, but it must be safeguarded through timely intelligence and responsible trade practices."

Domestic markets have already begun reflecting the impact, with Basmati prices witnessing a sharp decline amid buyer hesitation and delayed contracts. Prolonged uncertainty could pressure farm-gate prices and inventory holding costs if alternative markets are not activated swiftly.

IREF has advised exporters to prefer secured payment mechanisms and diversify into alternative destinations across West Asia, Africa, and Europe to cushion potential disruptions. As geopolitical decisions increasingly shape trade outcomes, India's rice export ecosystem faces a critical test in navigating sanctions-driven volatility while safeguarding farmer interests and export stability.

- ANI