Iran war turmoil risks India’s $11.8 bn agri exports to West Asia

Escalating tensions involving Iran and the wider conflict in West Asia are are posing a risk to India’s nearly $11.8-billion agricultural exports to the region, potentially affecting farmers, food processors and exporters across several states.Experts express concern that prolonged instability in the region could severely impact India’s farm economy, particularly in states such as Karnataka, Telangana, Andhra Pradesh, Punjab and Maharashtra, which are major producers of export-oriented agricultural commodities.
According to industry estimates, India exported nearly $11.8 billion worth of agricultural and food products to West Asia in 2025, accounting for more than one-fifth of the country’s total agri exports. Cereals, fruits, vegetables and spices dominate India’s export basket to Gulf markets.
Rice exports face biggest risk
Among all commodities, rice exports face the largest potential impact. India shipped $4.43 billion worth of rice to West Asia in 2025, representing about 36.7 per cent of its global rice exports.Major buyers of Indian basmati rice include Saudi Arabia, Iraq and Iran. Industry sources estimate that nearly four lakh metric tonnes of basmati rice are currently stuck at ports or in transit due to disruptions in shipping routes.A slowdown in rice exports could significantly affect farmers in major producing states such as Punjab, Haryana, Uttar Pradesh, Andhra Pradesh and Telangana.“If instability around the Strait of Hormuz persists, the impact could ripple through India’s agricultural economy, highlighting the need for exporters to diversify markets and reduce excessive dependence on a single region,” said Ajay Srivastava of the Global Trade Research Initiative.
Heavy dependence on Gulf markets
Over the past decade, India’s agricultural exports have developed deep dependence on markets in the Gulf region for products such as rice, bananas, spices, meat and dairy products.More than 70 per cent of India’s shipments of certain food products, including sheep and goat meat, fresh beef, bananas, copra and some spices, are destined for West Asia, making them particularly vulnerable to trade disruptions.Other products such as dairy items, beverages, tea and several edible oils also rely significantly on Gulf demand.
“The Gulf has been a natural destination due to its geographic proximity and large Indian diaspora. But the ongoing conflict in West Asia, along with disruptions to shipping routes and rising insurance costs, is now creating uncertainty for exporters and could directly affect farmers and food processors across several Indian states,” the GTRI said in a note.
Strategic shipping route under pressure
The widening conflict has also disrupted traffic through the Strait of Hormuz, one of the world’s most critical energy and shipping chokepoints located between Iran and Oman.
Although India currently does not import oil directly from Iran, the route remains vital for the country’s energy security as nearly 40 per cent of India’s oil imports pass through the Hormuz corridor, according to a note by SBI Research.The conflict intensified after joint air strikes by the United States and Israel on Iran on February 28, leading to rising geopolitical tensions and disruptions in regional trade flows.
Analysts raise concern that rising crude oil prices combined with export disruptions could impact India’s broader economy.According to SBI Research, every $10 increase in crude oil prices could raise inflation by 35–40 basis points. In a worst-case scenario where oil prices surge to $130 per barrel, India’s GDP growth could fall to around 6 per cent, compared with an assumed 7 per cent growth for FY27.
According to information,India’s spice exports are also closely tied to Gulf demand. Nearly 70.5 per cent of exports of nutmeg, mace and cardamom are shipped to West Asia.Exports of spice seeds such as cumin and coriander reached $163 million, while shipments of ginger and turmeric totaled $173 million, with around 23 per cent of these exports destined for the region in 2025.These crops primarily support farmers in states such as Kerala, Karnataka, Rajasthan and Gujarat.
West Asia broadly includes the six countries of the Gulf Cooperation Council — Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oman and Qatar — along with countries such as Iran, Iraq, Israel, Jordan, Lebanon, Syria and Yemen.Nearly one crore Indians live and work across the region, making it a crucial economic and trade partner for India.According to the Ministry of External Affairs, more than 52,000 Indians returned to the country between March 1 and 7 amid rising tensions in the Gulf region.Experts say the unfolding geopolitical situation highlights the urgent need for India to diversify its agricultural export markets and strengthen supply chain resilience to safeguard farmers and exporters from regional disruptions.

(Business Correspondent)