Indian Rice Exports to Iran Stay Afloat via Rerouting Amid US Sanctions

Indian rice exporters have managed to keep trade with Iran flowing despite fresh US sanctions, relying on alternative shipping routes to bypass logistical hurdles. While direct shipments to Iran saw a sharp decline in the first quarter of the current financial year, overall exports to the Middle East have remained steady, according to industry officials.

Iran remains the second-largest global market for Indian basmati rice, purchasing over one million tonnes in the last financial year—a 17% increase from the previous year. However, direct exports during April-June 2026 fell 64% compared to the same period in 2025, with volumes dropping by roughly 185,000 metric tonnes and value declining by nearly Rs 1,049 crore.

Dev Garg, Vice President of the Indian Rice Exporters Federation (IREF), said the dip in direct trade is offset by a notable shift in shipment patterns. Exports to Jordan surged by 800%, while those to Turkey doubled, indicating that goods are being rerouted to reach the Iranian market indirectly.

"This clearly shows that though the sanctions might be in place, rice is a commodity which is majorly exempt from sanctions on humanitarian grounds. But things like shipping, insurance and other logistical challenges pose a major threat to direct trade with Iran," Garg said.

Despite the drop in direct volumes, exports to the wider Middle East grew by 3%, or approximately Rs 750 crore. The overall decline in basmati rice volumes was limited to around 50,000 metric tonnes, while export value actually increased by 3%—a divergence that points to higher logistics and insurance costs being passed through the supply chain.

"Even after a marginal fall in quantity, the total exports have risen. This is a very big indicator that the overall Indian ecosystem has remained largely resilient to any supply shock to the Iranian market," Garg added.

The comments come as the US administration announced sanctions on over 60 entities and warned of economic consequences for those dealing with Iran. Exporters, however, expect rice trade to remain largely insulated due to the staple's humanitarian importance and limited alternative sources of supply. Rice is a key component of the Iranian diet, providing a strong basis for continued trade.

Iran accounts for around 15% of India's basmati rice exports, while the Middle East collectively represents nearly 70% of India's total rice exports globally.