India could face fresh economic challenges following the United States’ decision to impose a 25 per cent tariff on countries conducting trade with Iran, a move announced by US President Donald Trump. The development comes at a time when India is already grappling with steep tariffs on certain exports to the American market.
India remains one of Iran’s top trading partners, with bilateral trade reaching approximately $1.68 billion in the 2024–25 financial year. Official data shows that India exported goods worth $1.24 billion to Iran while importing goods valued at $0.44 billion, reflecting a stable trade relationship despite longstanding international sanctions on Tehran.
Indian exports to Iran include commodities such as rice, tea, sugar, pharmaceuticals, manmade fibres, electrical machinery and artificial jewellery. In return, India imports dry fruits, chemical products and glassware from Iran, underscoring a diversified trade basket between the two countries.
Beyond trade, India and Iran share strategic cooperation, particularly through the development of the Shahid Beheshti Port at Chabahar. The two nations signed a memorandum of understanding in 2015 to jointly develop the port, which India views as a crucial gateway to Afghanistan and Central Asia, allowing it to bypass Pakistan for regional trade and connectivity.
The United States recently extended a six-month sanctions waiver, enabling India to continue operations at the Chabahar port until April next year. The extension was seen as a diplomatic relief for New Delhi, given the broader sanctions regime imposed on Iran and Russia. The port also plays a key role in facilitating humanitarian assistance and commercial movement across the region.
Industry experts warn that the new US tariff policy could also affect other major trading partners of Iran, including China, the UAE and Turkey. While China remains Iran’s largest trading partner, countries like India may need to carefully balance strategic interests, regional connectivity goals and evolving geopolitical pressures amid tightening US trade measures.
