Basmati trade disrupted! What unrest in Iran and Trump’s 25% tariffs mean for India’s rice exports and prices – explained
Rising tensions in Iran and US President Donald Trump’s latest move to impose 25% tariffs on any country doing business with Iran could potentially impact India’s rice exports.
“Effective immediately, any country trading with the Islamic Republic of Iran will pay a tariff of 25% on any and all trade conducted with the United States.
order is final and conclusive. Thank you for your attention to this matter!” Trump posted to the social media platform Truth Social.
Iran remains one of the most important overseas markets for Indian Basmati, but the ongoing instability is increasingly straining order execution, causing dispatch delays and disorganised delivery schedules in the current financial year.
Trump tariffs and Iran tensions: What’s next for India’s Basmati rice exports?
IREF says growing internal turmoil and large-scale demonstrations in Iran have begun to impact India’s rice export outlook, disrupting trade flows and putting pressure on basmati prices domestically.
Uncertainty has spread across the export chain, affecting contracts, payments and shipping plans.
This pressure is now clearly visible on the domestic markets. Prices of key varieties of Basmati have fallen sharply over the past week due to cautious buying, postponed deals, and a rising risk appetite among exporters.
India’s rice export to America
Dr Prem Garg, National President of the Indian Rice Exporters Federation (IREF), said, “Iran has historically been a pillar market for Indian Basmati.
However, the current internal turmoil has disrupted trade channels, slowed payments and eroded buyer confidence. Its immediate impact is evident in the Indian mandis, where Basmati prices have softened sharply in a matter of days.
Exporters are especially anxious about their credit exposure and shipments. We should exercise extreme caution when it comes to deadlines.”
Dr Garg said the IREF has advised exporters to re-evaluate the risks associated with Iranian contracts, strengthen payment safeguards, and avoid excessive inventory buildup targeted only at the Iranian market. “
We are not sounding an alarm but rather urging prudence. In times of geopolitical and internal instability, trade is often the first casualty.
A balanced approach is necessary to protect both exporters and farmers. He stated that while India’s rice sector is resilient, it requires protection through timely intelligence and responsible business practices.
The federation has also urged industry participants to expand their presence to alternative destinations in West Asia.
To mitigate the impact of an extended slowdown in shipments to Iran, the federation has urged industry participants to expand their presence to alternative destinations in West Asia, Africa, and Europe. Talking about Trump’s announcement of 25% tariffs,
IREF pointed out that Indian rice shipments to the US are already charged a 50% duty, a giant jump from the previous tariff rate of 10%. “Despite this substantial tariff increase, the volume of Indian rice exports to the US has not declined.”
Resilience is largely due to the fact that Indian rice – particularly basmati – has no equivalent substitute for Pakistani or US-origin rice.
Moreover, Indian rice is deeply embedded in the culinary traditions of immigrants from the Gulf region and the Indian subcontinent, ensuring sustained consumer demand despite price pressures,” IREF says.
India-Iran Trade Overview
There is currently little certainty regarding how the proposed 25% tariff will be implemented. Even in a scenario where the overall tariff burden increases further, IREF does not expect a major decline in Indian rice shipments to the US.
“The United States remains the 10th largest market for Indian rice globally and the 4th largest destination for Indian Basmati, underscoring its strategic importance.”
IREF said. In contrast, IREF flagged more serious risks emerging from Iran, where disruptions at the local market level have begun to interfere with trade payments. Importers have reported issues with exporters.
They are struggling to meet contractual obligations and transfer funds to India, creating a high level of uncertainty in ongoing transactions.
Although such episodes have been seen before, the direction and duration of the current disruption remain uncertain, and they are likely to cause additional volatility in prices.
These disruptions could potentially trigger additional volatility in prices, cash flows, and overall market confidence in the near term. The situation in Iran reminds us that food exports, particularly strategic commodities like rice, are highly sensitive to regional stability.
especially strategic commodities like rice – are highly sensitive to regional stability. For India’s rice ecosystem, taking timely precautions today can help prevent a deeper crisis tomorrow,” IREF concluded.
