US sanctions and UAE’s trade halt severely disrupt India’s rice, tea, and pharma exports to Iran, complicating payments and increasing costs

NEW DELHI: Planned new U.S. sanctions on Iran and the UAE’s halt on Tehran trade could severely disrupt Indian exports of rice, tea and pharmaceuticals to Iran, which have been largely routed through Dubai’s port in recent years, Indian exporters said on Monday.

India has been among Iran’s five largest trading partners, though bilateral trade has fallen by more than 90% from its 2018/19 highs of $17 billion, with exports now limited mostly to goods exempted on humanitarian grounds.

Indian exporters fear U.S. President Donald Trump’s proposed “economic D-Day” plan, likely to be unveiled later on Monday, could further squeeze trade weakened by sanctions, banking caution and shipping constraints.

The United Arab Emirates last week suspended all trade activities, exchanges and financial transactions with Iran until further notice.

“We are already seeing indications that transactions and payment mechanisms traditionally routed through the UAE are exploring alternative jurisdictions,” said Dev Garg, vice president of the Indian Rice Exporters Federation, suggesting Turkey as an alternative.

Exporters could face higher freight and other costs

In the first half of 2026, India exported $383.11 million of rice to Iran – the second-largest overseas market for premium rice, including long-grained basmati.

“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 said.

Until recently, Indian exporters typically received payment through an Indian authorised-dealer bank from a UAE trader’s account – in dirhams, dollars or another permitted currency -while the trader separately collected payment from its Iranian customer through legally compliant banking channels.

Indian tea exports to Iran totalled $14.34 million in the first half of 2026. Prabhat Bezboruah, a senior tea planter and former chairman of the state-run Tea Board, said sales to Iran will be affected as a lot of that goes through the UAE.

There was no immediate comment from India’s trade and foreign ministries.

A New Delhi-based exporter said direct shipments could rise, but payment problems may worsen.

Ajay Srivastava of the Global Trade Research Initiative said India’s Iran trade has already fallen sharply since the previous sanctions.

“We hope food and pharmaceutical products may receive exemptions, although exporters could still face higher freight, insurance and payment costs,” he said.

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. Officials have said crude oil imports from Iran were largely enabled by a U.S. exemption granted earlier this year, and may be difficult to sustain.

Published Date: August 25, 2026