Indian exporters are expressing concerns that the proposed 'Economic D-Day' plan by Donald Trump could further restrict trade, which is already weakened by sanctions, banking sector caution, and maritime transport issues.
According to Indian exporters, new US sanctions against Iran and the suspension of trade with Tehran by the UAE could seriously disrupt exports to Iran of goods such as rice, tea, and pharmaceuticals, which have mainly been routed through the port of Dubai in recent years.
Although India is one of Iran's five largest trading partners, bilateral trade has fallen by more than 90% compared to peak figures in 2018/19, which reached $17 billion. Currently, exports are limited mainly to humanitarian exemptions.
Last week, the United Arab Emirates suspended all types of trade, exchanges, and financial operations with Iran until further notice.
Dev Garg, Vice President of the Federation of Indian Rice Exporters, noted that signs are already appearing that transactions and payment mechanisms traditionally passing through the UAE are seeking alternative jurisdictions, naming Turkey as one option.
In the first half of 2026, India exported $383.11 million worth of rice to Iran—the second-largest foreign market for premium rice, including long-grain basmati. Garg emphasized that any prolonged disruption to this corridor would have a much greater impact on the basmati industry, especially mills and exporters in North India, than on India's overall non-basmati rice exports.
Previously, Indian exporters typically received payment through a bank authorized dealer from the UAE trader's account in dirhams, dollars, or another permitted currency, while the trader separately collected payment from their Iranian client through legal banking channels.
The total value of India's tea exports to Iran in the first half of 2026 was $14.34 million. Prabhat Bezoboruah, a senior tea planter and former chairman of the state Tea Board, stated that sales to Iran will suffer because a significant portion of these supplies passes through the UAE.
An exporter from New Delhi reported that direct shipments might increase, but payment issues could worsen. Ajay Sirishtava from the Global Trade Research Initiative noted that India's trade with Iran has already sharply decreased following previous sanctions. He added that he hopes for exemptions for food and pharmaceuticals, but exporters may still face higher costs for freight, insurance, and payments.
Iran's exports to India primarily consisted of crude oil worth about $707 million, as well as small batches of liquefied petroleum gas, apples, dates, almonds, and kiwis during the first six months of 2026. Officials reported that the import of crude oil from Iran was largely supported by a US exemption granted earlier this year, and maintaining it may be difficult.