US sanctions Iran: Additional 25% tariffs to have minimal impact on India, say government sources - here’s why

India is unlikely to face any major impact from the 25 per cent tariff announced by the US President Donald Trump on countries doing business with Iran, as per government sources cited by news agency ANI, who pointed to India’s limited trade exposure with Tehran.Newly announced US tariffs are ‘likely to have minimal impact on India’ as Iran does not feature among the nation's top 50 trading partners, the government sources said. India’s total trade with Iran stood at around $1.6 billion last year, accounting for just 0.15 per cent of India’s overall trade. This figure is expected to decline further in the current financial year due to broader external economic factors. Of Iran’s total imports of about $68 billion in 2024, the UAE, China, Turkiye and the European Union together accounted for the bulk, while India’s share was only $1.2 billion, or 2.3 per cent.Exporters have also downplayed concerns. Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), said Indian companies and banks remain fully compliant with US Office of Foreign Assets Control norms and engage only in permitted humanitarian trade, mainly food items and pharmaceuticals, reported news agency PTI.“There is, therefore, no basis to anticipate any adverse impact on India,” Sahai said.

He noted that India’s trade with Iran largely falls outside the scope of sanctions due to its humanitarian nature. In 2024-25, India’s total trade with Iran was $1.68 billion, including $1.24 billion in exports, primarily from the farm and pharmaceutical sectors, as per PTI.Industry representatives, however, flagged other challenges. Sahai said the sharp depreciation of the Iranian currency is a bigger concern for exporters, as it weakens consumer purchasing power and raises risks of cancelled contracts. Rice exporters also said their current exposure to Iran is limited and increasingly routed through the UAE to manage risks, reported ANI.Overall, exporters remain cautious but believe the proposed US tariff will have little direct effect on India, given the small trade volumes and the humanitarian nature of most shipments.