India’s Basmati Rice Trade Hit By Iran Unrest & Trump's Tariffs; Exporters Flag Payment Risks

Indian basmati rice exporters are flagging fresh pressure on prices and payments as political unrest in Iran disrupts trade flows and raises new risks for Indian shipments. According to exporters, basmati rice prices have declined by Rs 5-8 per kg across key varieties over the past few weeks as Iranian buyers struggle with payments amid domestic instability.

Iran is one of India’s largest basmati markets, and exporters say importers there have conveyed their inability to honour existing remittance commitments.

The Indian Rice Exporters Federation said the situation has forced exporters to reassess exposure to the market, especially for new shipments. "Exporters have been advised to be cautious while shipping to Iran and to closely evaluate payment risks," the federation noted. India’s basmati rice exports to Iran are estimated at $468 million so far in FY26, underlining the market’s significance for the sector.

The uncertainty has been compounded by a fresh geopolitical trigger. US President Donald Trump has announced a 25% tariff on countries that continue doing business with Iran, linking Iran-related trade directly to access to the US market. The declaration comes amid escalating unrest in Iran and renewed tensions between Washington and Tehran.

For Indian rice exporters, the direct impact of the proposed tariff remains unclear. India’s rice exports to the US already face tariffs of up to 50%, limiting direct exposure. However, exporters say the broader threat lies in risk aversion among banks, insurers and logistics providers, which could further complicate payments and shipping.

Iran remains a key trading partner for India, with bilateral trade standing at $2.33 billion in FY23, led by Indian exports such as rice, tea, sugar and pharmaceuticals. While trade moderated in early FY24, rice continues to be one of the most sensitive segments due to its dependence on smooth financial settlements.

In the near term, exporters say price softness may persist unless payment visibility improves. Much will depend on how aggressively the US enforces the tariff threat and whether any exemptions or clarifications emerge. i