The United Arab Emirates' (UAE) abrupt trade embargo on Tehran and the United States' impending implementation of new secondary sanctions are seriously disrupting India's exports to Iran.
Indian exports of rice, tea, and pharmaceuticals to Iran, which have been primarily channelled through Dubai's port in recent years, might be disrupted by planned new U.S. sanctions on Iran and the UAE's freeze on Tehran commerce, Reuters reported, citing Indian exporters.
Although bilateral commerce has decreased by more than 90% from its 2018–19 highs of $17 billion, India has been one of Iran's top five trading partners. Exports are now primarily restricted to products exempted on humanitarian grounds.
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Indian exporters worry that U.S. President Donald Trump's "economic D-Day" strategy, which is expected to be presented later on Monday, could further strain commerce that has already been damaged by shipping restrictions, banking reluctance, and penalties.
Last week, the United Arab Emirates halted all financial transactions, commerce, and exchanges with Iran until further notice.
Dev Garg, vice president of the Indian Rice Exporters Federation, reportedly stated, "We are already seeing indications that transactions and payment mechanisms traditionally routed through the UAE are exploring alternative jurisdictions."
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Iran is the second-largest international market for premium rice, including long-grained basmati, and India sold $383.11 million worth of rice to Iran in the first half of 2026.
"Any prolonged disruption in this corridor will have a much greater bearing on the basmati industry, especially on millers and exporters in northern India, than on India's overall non-basmati rice trade," Garg was quoted as saying by the news agency.
Up until recently, Indian exporters would usually get payment in dirhams, dollars, or another approved currency from a UAE trader's account through an Indian authorised dealer bank, while the trader would separately collect payment from its Iranian customer through legally compliant banking channels.
In the first half of 2026, India exported $14.34 million worth of tea to Iran. Senior tea farmer and former head of the state-run Tea Board Prabhat Bezboruah stated that sales to Iran will be impacted because a lot of it passes through the United Arab Emirates.
A New Delhi-based exporter said direct shipments could rise, but payment problems may worsen.
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India's trade with Iran has already drastically decreased since the previous sanctions, according to Ajay Srivastava of the Global Trade Research Initiative.
"We hope food and pharmaceutical products may receive exemptions, although exporters could still face higher freight, insurance and payment costs," he reportedly stated.
Iran's exports to India were dominated by crude oil, valued at about $707 million, with far smaller shipments of liquefied petroleum gas, apples, dates, almonds and kiwi fruit in the first six months of 2026.
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