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Informist, Tuesday, Jan. 13, 2026

 

By Krity Ambey

 

NEW DELHI – India may evade the 25% tariff proposed by US President Donald Trump on countries trading with Iran, as bilateral trade with Tehran, which accounts for less than 1% of India's total annual trade, largely comprises humanitarian exports. However, India-Iran cooperation in the operation and development of the Chabahar Port under the International North–South Transport Corridor could still emerge as a potential friction point.

 

New Delhi is awaiting a formal executive order from the White House to gain clarity on the scope and implementation of the proposed tariff before deciding its next course of action, a commerce ministry official said. While Trump announced the levy on Truth Social and said it would take effect immediately, the administration is yet to issue an order detailing its application. Trump also did not name any specific country in his post on Truth Social.   

 

Trump's 25% tariff announcement comes after a communications shutdown imposed by Iranian authorities which has isolated citizens amid nationwide protests that began in December over economic and political issues, including record-high inflation and poor governance. Iran's crackdown on protesters has resulted in multiple deaths.

 

India's total trade with Iran in 2024-25 (Apr-Mar) was $1.68 billion, including $1.24 billion in exports, primarily from the farm sector. India's key exports to Iran include cereals, animal fodder, tea and coffee, spices, fruits and vegetables, organic chemicals, and pharmaceuticals. Given the humanitarian nature of most of these products, the Federation of Indian Export Organisations believes that a 25% US duty on imports from India is unlikely. "However, we foresee a much larger impact on the Iranian currency, which is now at its historic low, and may even further go down, impacting both Iranian exports and imports," the export promotion council said. 

 

While India is unlikely to be immediately affected, a prolonged delay in the India-US trade deal could have wider ramifications, including the risk of punitive measures linked to New Delhi's strategic engagement with Tehran, Nirmal Bang Institutional Equities' Deputy Head of Research & Economist Teresa John said. A key pillar of that engagement is the Chabahar Port project.

 

In May 2024, New Delhi signed a 10-year lease agreement with Tehran to develop and operate the Chabahar Port, offering India an alternative trade route to Iran, Afghanistan, Eurasia, and Central Asia. The port is a critical component of the International North–South Transport Corridor--a multimodal network linking Mumbai to St. Petersburg via Iran and the Caspian Sea--launched jointly by India, Russia, and Iran in 2000.

 

Although the US announced broader sanctions on the Chabahar Port in September, it continues to enjoy a temporary exemption until April because of its role in facilitating Afghanistan's reconstruction. 

 

Indian goods already face a steep 50% tariff in the US, including a 25% duty linked to India's crude oil purchases from Russia. Despite this, Indian exports to the US have remained resilient, rising 11.4% on year to $59.04 billion in Apr–Nov.

 

The impact of the proposed 25% tariff on countries trading with Iran remains uncertain for India. Beyond this, New Delhi also faces the risk of sharply higher duties if US Congress passes a bipartisan sanctions bill targeting Russia and its trading partners. Trump has backed the bill, with a Congressional vote possible this week, according to US Senator Lindsey Graham.

 

At the same time, New Delhi and Washington are engaged on a trade deal that could address India's concerns over high tariffs. On Monday, US Ambassador to India Sergio Gor said the "next call" on the trade deal would be on Tuesday, though no announcement followed. Meanwhile, a commerce ministry official said there are no trade talks scheduled between the two sides this week. Indian Commerce Secretary Rajesh Agrawal said last month that the two sides are close to an interim framework agreement, but did not provide a timeline after missing the earlier target of finalising a deal by the fall of 2025.  End

 

US$1 = INR 90.19

 

Edited by Akul Nishant Akhoury

 

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