Iran unrest delays India’s ₹2,000 cr basmati rice export dues; exporters eye new markets

Indian basmati rice exports are facing a significant setback as payments worth approximately ₹2,000 crore are stuck as protests in Iran have halted trade. Iran, a major buyer, is unable to remit payments or honor contracts. This disruption is causing uncertainty for exporters, impacting basmati rice prices in India’s wholesale markets.

US President Trump announced a 25% tariff on countries trading with Iran, aiming to pressure Tehran amidst anti-government protests. However, the move is expected to have a limited impact on India’s overall trade, as most of its exports to Iran are humanitarian in nature and already compliant with US sanctions.

India’s trade with Iran is minimal, representing a small fraction of its total commerce. Recent US tariff announcements targeting countries doing business with Iran are not expected to significantly affect India’s economic engagement. Indian exporters remain watchful but composed. Trade with Iran is projected to decline further due to external economic factors.

External Affairs Minister S Jaishankar held discussions with US Secretary of State Marco Rubio, covering trade, critical minerals, nuclear cooperation, defense, and energy. Both leaders agreed to maintain ongoing contact on these vital bilateral issues.

Officials are evaluating changes to the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which relies primarily on import duty concessions, including the introduction of more direct incentives, to entice global premium EV makers to establish manufacturing bases in India.

US Ambassador designate Sergio Gor announced that trade pact discussions with India will resume Tuesday, aiming to resolve differences beyond tariffs. He emphasised the strong personal relationship between Trump and Modi, highlighting the partnership’s significance beyond trade, encompassing security, technology, and energy cooperation.

Buyers are intensifying factory audits and evaluations in hubs such as Tiruppur in Tamil Nadu, with plans to start or expand sourcing from India amid supply-chain uncertainties in Bangladesh and in anticipation of lower tariffs under the FTAs, said exporters.

Canadian province’s premier David Eby, who is leading a trade mission to India from January 12-17, told ET in an interview that the province is trying to develop more opportunities with India to diversify trade, which has been hit by the US tariffs.

India is strategically reorienting its partnerships towards the European Union as U.S. trade faces increasing tariffs. Germany’s Chancellor’s visit highlights this shift, with a potential EU free trade agreement and growing defense cooperation signaling a comprehensive, structural realignment in India’s foreign economic policy.

German Chancellor Friedrich Merz is in India to boost economic and security ties. This visit comes ahead of a planned EU-India free trade agreement. Discussions will cover trade, defense deals, and skilled labor recruitment. India seeks broader partnerships to reduce dependence on other nations. German companies see significant opportunities in India’s growing market.