Indian pharma exports to Iran decline thanks to its lower rupee reserves

India’s pharmaceutical exports to Iran have been affected due to depleting rupee reserves in the West Asian country. This is a result of India ceasing its crude oil imports from Iran in mid-2019, following US sanctions on Tehran.

The geopolitical shifts have impacted India’s pharmaceutical exports to Iran, which fell by 71.25 per cent in the April to August period this year compared with the same period last year. Data from the Pharmaceutical Exports Promotion Council (Pharmexcil) indicates that exports to Iran declined by 31.29 per cent in the financial year FY23 compared with the previous financial year.

Uday Bhaskar, director general of Pharmexcil, told Business Standard, “India’s exports to Iran have reduced in the first few months of this year by about 71 per cent due to India buying less oil from Iran, and the rupee-trade being adversely affected.”

Pharmexcil is now initiating dialogues with Iran to boost trade. Bhaskar met Heydar Mohammadi, head of administration at the Food and Drug Administration in Tehran, and Mohammad Abdehzadeh, chairman of the board at the Syndicate of Iranian Pharmaceutical Industries, earlier this week to discuss potential areas of collaboration between the two countries in the pharmaceutical and biopharmaceutical sectors.

Iran primarily imports bulk drugs and intermediates from India, while it relies on European countries for formulations. Bulk drugs make up nearly 65 per cent of India’s pharmaceutical exports to Iran.

Iran is a significant market in the West Asia and North Africa region for Indian pharmaceutical exports. In terms of value, however, it is a smaller market compared to the US ($8.3 billion in FY23) or Europe ($5 billion). India’s pharmaceutical exports to Iran were $59.14 million in FY23, down from $86 million in the previous financial year. The exports have been declining in recent years, data reveals — from $205.1 million in FY20 to $59.14 million in FY23.

Between April and August this year, exports to Iran were a mere $8.03 million.

Bhaskar stated that the value of Iran’s pharmaceutical market in 2022 was $2.6 billion, and the market is projected to decline by 6.4 per cent in US dollar terms in 2023.

A pharmaceutical exporter to Iran noted that as Iran’s rupee reserves are depleting, trade with India is suffering. “China is making inroads into the Iranian market with bulk drug exports as Iran has Chinese yuan to support this trade. China continues to buy discounted Iranian crude despite sanctions,” the exporter added, emphasising that India is rapidly losing its advantage in this market.

Pharmaceutical products and other trade items, such as basmati rice and tea, have also been affected due to the declining rupee reserves. Reports indicate that Iranian importers are considering importing basmati rice from countries like Pakistan, Thailand, and Turkey.

Data from UNComtrade reveals that in 2021, Iran’s imports of formulations from China, the Netherlands, and Turkey increased by 91.1 per cent, 62.2 per cent, and 205 per cent, respectively.

Category wise share in exports in FY23

Year wise India’s pharma exports to Iran (USD mn)