US expands Iran sanctions to five sectors, putting Indian exports at risk

The United States has expanded its economic pressure on Iran by adding five sectors to the areas that may face sanctions and imposing measures against nearly 60 people, companies and vessels. Indian exporters have warned that the move could affect shipments of rice, tea and medicines to Iran.

The campaign, called Operation Economic Isolation by the US, is aimed at restricting Iran’s overseas financial and commercial routes. Washington has also warned foreign banks, companies and intermediaries that continue working with Iran that they could face increased pressure, including deadlines to stop activities considered supportive of Iranian trade and revenue.

Much of India’s recent trade in these goods with Iran has moved through the port of Dubai. The proposed measures could therefore complicate a channel used by Indian exporters, according to concerns reported by Reuters.

Five sectors added to the sanctions framework

The US Treasury Department’s Office of Foreign Assets Control has formally placed digital assets, technology, gold, aviation and shipping among the sectors of Iran’s economy that can be covered by sanctions under a 2023 executive order.

The order was issued by Donald Trump during his first term in January 2020. It initially covered Iran’s construction, mining, manufacturing and textile industries. The Treasury Department was authorised to add further sectors later. The financial sector was added during the same year, followed by the oil and petrochemical sectors in 2024.

The latest expansion increases the range of Iran-linked activity that could attract secondary sanctions. The Treasury Department says OFAC may impose sanctions on any person involved in activities connected with Iran’s economy in these sectors, regardless of the country where that person lives.

That approach places foreign organisations doing business with Iran in the potential scope of US action. The American government says the targeted sectors are important to the movement of money, technology, equipment and oil.

Why Washington is targeting these areas

According to the US Treasury Department, Iran uses digital assets to transfer money and avoid sanctions. Washington also says Tehran seeks advanced technology for its weapons programmes and turns to gold to protect assets as the Iranian rial loses value.

The US government further says Iran uses aviation and shipping networks to move equipment, money and oil. The latest measures are intended to restrict those networks as well as the people and organisations connected with them.

The nearly 60 newly sanctioned people, companies and vessels come from different countries and were designated on different grounds. OFAC says some were involved in supplying equipment for Iran’s missile and nuclear programmes. Others were linked to cyber operations, oil exports or the transfer of revenue earned from those exports.

Shipping, gold trading and Iranian aviation had already faced different US restrictions over several years. The change under the new campaign is not limited to adding sectors: existing sanctions are also being tightened, while more foreign individuals and entities working with Iran are being targeted.

Education and sports exemptions narrowed

The package also suspends several activities that had previously been permitted under OFAC general licences, despite broad sanctions on Iran. The changes affect some educational, research and sporting exchanges between Iran and the United States.

Earlier arrangements allowed Iranian students to study in other countries through certain programmes. Universities in the United States could enter into undergraduate and postgraduate exchange agreements with Iranian universities, including scholarships for Iranian students to study in America.

Under specified conditions, some admissions and tuition services, online courses, non-commercial educational and research activities, and academic or professional examinations were also permitted. After the relevant licence was suspended, those activities no longer receive the benefit of that general licence. Separate applications will now be required for activities covered by the change, according to the US announcement.

A licence covering sporting exchanges, in place since 2013, has also been suspended indefinitely. It had allowed professional and amateur sporting events and exchange programmes between Iran and the United States. The permitted activities included tournaments and exhibitions, athlete sponsorship, coaching, refereeing and sports education.

Potential impact on India

India has been among Iran’s five largest trading partners, according to Reuters. However, trade between the two countries has dropped by more than 90% from its peak of 17 billion dollars in 2018-19.

Indian exports to Iran now mainly consist of goods that have humanitarian exemptions from US sanctions. Rice, tea and medicines are among the products whose exports could face difficulties if banks, intermediaries or shipping companies become more cautious about handling Iran-related transactions.

The concern comes as Iran’s economy is already under severe strain. Several months of military conflict have caused heavy damage, while oil exports and foreign trade have been disrupted. Inflation has risen sharply and the national currency has fallen in value.

The campaign has also begun as a ceasefire between the two countries is described as being in a fragile phase. US Treasury Secretary Scott Bessent called the effort unprecedented and said its purpose was to close Iran’s economic routes abroad. In a speech, he presented the campaign as part of military pressure on Iran and said US armed forces had “laid the groundwork.”

The new measures therefore extend beyond Iran’s domestic economy. They are designed to increase the risks for foreign banks, companies, intermediaries and individuals involved in Iranian trade, while potentially affecting the limited humanitarian commerce that remains between India and Iran.