India's Modi-Iran meeting comes amid US warnings of sanctions on Tehran's trading partners

U.S. sanctions on Iran spark new pressure on India‑Iran trade ties

The Trump administration has rolled out a fresh slate of economic sanctions against Iran, launching a campaign dubbed “Operation Economic Outcast.” The new rules threaten secondary sanctions against any nation that continues to do business with Tehran, a move that has placed India, a key U.S. partner in the Indo‑Pacific, in a difficult position.

A meeting amid tightening U.S. pressure

On Monday, a week after the U.S. announced its sanctions package, Indian Prime Minister Narendra Modi met Iranian President Masoud Pezeshkian on the sidelines of the Shanghai Cooperation Organization summit in Kyrgyzstan. It was the first time the two leaders had spoken since the war that broke out six months earlier, according to an Iranian readout. Pezeshkian urged Modi to use India’s contacts to encourage the parties involved in the conflict to return to dialogue and thanked the Indian premier for “standing by Tehran.” Modi reiterated that New Delhi wants to “strengthen its long‑standing friendship” with Iran and “expand and diversify” trade ties.

The meeting was seen by policy experts as a signal to Indian voters that the country would not bow to U.S. pressure. “India‑Iran relations have already been largely hollowed out by previous rounds of sanctions, so there is no question of India trying to balance between the U.S. and Iran,” said Senior Fellow Sadanand Dhume of the Council on Foreign Relations. “If forced to choose, New Delhi will obviously and emphatically choose its valuable commercial relationship with the U.S. over its skimpy trade ties with the Islamic Republic.”

U.S. officials warn of sanctions

U.S. Secretary of State Marco Rubio, speaking to Fox News’ Brian Kilmeade, said he did not see a formal trade deal between India and Iran. “What ultimately happens, though, is – and the President’s been very clear – is no country should be helping Iran evade sanctions. No country should be out there helping them create mechanisms by which they can generate revenue that they will then use to sponsor terrorism and try to build a nuclear weapon. And if countries decide to do that, then we’re going to have to sanction them too.”

A Treasury Department official echoed Rubio’s stance, saying the administration continues to hold “positive discussions with our economic partners to ensure Iran never possesses a nuclear weapon.” The Treasury has already sanctioned four India‑based companies and three Indian nationals for alleged links to Iranian petroleum trade, and it has warned that banks, shippers, insurers, and trade intermediaries will receive a timeline to halt any Iran‑related activity identified by Washington before further penalties are imposed.

Trade links that complicate the picture

India has been among Iran’s top five trading partners over recent years, but bilateral trade fell sharply after the sanctions were introduced. New Delhi’s exports to Tehran are largely humanitarian‑exempt goods such as pharmaceuticals, and it is the second‑largest overseas market for Indian rice, with $383 million worth of rice shipped in the first half of the year. In April, India resumed importing Iranian crude oil for the first time in seven years, after the U.S. briefly eased sanctions to mitigate the Middle East conflict’s impact on global energy markets. Iran’s oil shipments to India were valued at roughly $707 million in the first half of the year.

The U.S. crackdown has already affected Indian exporters. The United Arab Emirates, a key commercial hub for trade with Iran, has suspended many commercial and financial dealings with Tehran, squeezing the supply chain for Indian firms that rely on Dubai as a gateway to Iran.

Strategic interests beyond commerce

India’s engagement with Iran extends beyond trade. The Chabahar port, Iran’s only oceanic port, offers a critical trade corridor linking India to Central Asia and Europe via Iran, bypassing Pakistan. U.S. sanctions uncertainty has repeatedly complicated India’s operations in the port, according to analysts. While the country has shown it will resist U.S. pressure when core interests are at stake—defending ties with Russia, for example—many experts argue that Iran no longer carries the same weight as it once did.

Diplomatic implications

For the United States, squeezing a major economy like India over its ties to Tehran could pose a diplomatic risk. Washington has long viewed a strong U.S.–India partnership as a counterbalance to Chinese influence, and the new sanctions threat tests that relationship. “The U.S. should learn from its own past success in quietly persuading India to generally kick its Iran oil habit,” said Dhume. “Quiet diplomacy works better with India than bluster.”

The timing of the sanctions is notable. Chinese President Xi Jinping is set to visit India for next week’s BRICS summit, where Russian President Vladimir Putin and Iranian President Masoud Pezeshkian will also be in attendance. Analysts say the ultimate impact will depend on how aggressively Washington moves from warnings and diplomacy to actual secondary sanctions—especially with India, whose economic ties to Iran could become a flashpoint in U.S. strategy.

India has not yet responded to Fox News Digital’s request for comment. The country faces a delicate balancing act: maintaining a valuable commercial relationship with the United States