US plans extra 25% tariff over Iran trade: What it means for India

India could face a sharp rise in US tariffs after Donald Trump announced a 25 per cent duty on countries trading with Iran, adding pressure on exporters already hit by higher levies

India, which is already facing steep tariffs of up to 50 per cent from the US, including a 25 per cent penalty for trading with Russia, may once again be in Washington’s firing line.

 

On Monday (local time), US President Donald Trump announced that Washington would impose a 25 per cent tariff on countries trading with Iran, citing Tehran’s violent crackdown on widespread protests that have left nearly 600 people dead, with thousands arrested across the country.

 

India, along with China, is expected to be among the most affected, as it is one of Iran’s largest trading partners.

 

 

Here is a closer look at India’s trade relationship with Iran and the likely impact of the proposed tariffs.

India-Iran trade relations

According to the Indian Embassy in Tehran, New Delhi is among Tehran' top five trade partners. Major Indian exports to Iran include rice, tea, sugar, pharmaceuticals, man-made staple fibres, electrical machinery, and artificial jewellery. Major imports from Iran include dry fruits, organic and inorganic chemicals, and glassware.

 

Data from the Department of Commerce shows that during the financial year 2024-25, India exported goods worth $1.24 billion to Iran and imported goods worth $0.44 billion, taking the total bilateral trade to $1.68 billion. However, the trade balance has drastically come down from 2018 levels.

India's major exports to Iran

According to Trading Economics data, some of India’s major exports to Iran in 2024 included cereals, coffee, and fruits. India exported cereals worth $698.51 million, followed by residues from the food industry and animal fodder worth $149.49 million. Coffee, tea, mate, and spices accounted for exports worth $73.93 million, while edible fruits, nuts, citrus peels, and melons were valued at $66.12 million. 

Iran is also one of the largest overseas markets for Indian basmati rice. India exported basmati rice worth $468.10 million to Iran during April–November period of the current financial year, amounting to nearly 5.99 lakh metric tonnes. 

 

The Indian Rice Exporters Federation (IREF) on Tuesday said that additional tariffs may weigh heavily on basmati rice exports, triggering a sharp decline in domestic prices and forcing exporters to reassess their exposure to Iran.

 

The protests have already disrupted payment cycles, delayed shipments, and dented buyer confidence. According to IREF, prices of key basmati varieties have dropped by ₹5-10 per kilogram.

India's imports from Iran

Meanwhile, India’s major imports from Iran in 2024 included organic chemicals worth $512.92 million. This was followed by edible fruits, nuts, citrus peels, and melons worth $311.60 million, mineral fuels and oils worth $86.48 million, and salt, sulphur, earth, stone, plaster, lime, and cement worth $55.65 million.

 

Other key imports included inorganic chemicals, precious metal compounds, and isotopes worth $28.76 million, as well as plastics worth $24.28 million, according to Trading Economics data.

 

An additional tariff is likely to make all of these trade flows more expensive.

US tariff impact on India

Higher tariffs are expected to further strain India, which is already reeling under the impact of the steep 50 per cent tariffs imposed by the US. The textile and seafood sectors have been hit the hardest, while gems and jewellery and automobile components have also faced significant pressure.

 

The US imposed a 50 per cent tariff on Indian goods starting August last year, which included a 25 per cent penalty for importing Russian crude oil and arms. While both India and the US maintain that they share friendly ties and have been engaging in negotiations, a comprehensive trade deal has not yet been reached.

 

After taking office on Monday, US Ambassador to India Sergio Gor said that a call has been scheduled for today to discuss trade terms with the US. Referring to the relationship between Trump and Prime Minister Narendra Modi, Gor also said that real friends can disagree, but they always resolve their differences in the end.