Iran is a big market for Indian basmati rice and premium-quality orthodox tea and exporters feel they may to lose the Iran market.
“Iran is a big market for basmati rice. At present, there is a lot of confusion in the market on what will happen after US sanctions. Our government is in talks with Iranian government to avoid US sanctions and do business smoothly. We are hopeful something will emerge soon. Exports are still going and the trade is on a wait and watch mode,” said Gumnam Arora, joint managing director, Kohinoor Foods.
At present, basmati rice fetches $ 1,200-$ 1,300 per tonne in the world market. India exported 0.87 million tonnes of basmati rice to Iran in FY18 and total exports stood at 4.05 million tonnes. In the current fiscal, the trade is hopeful of exporting 1 million tonnes of basmati rice to Iran.
“The situation is not that bad now as UN has not imposed sanctions on Iran. The US sanctions can only affect dollar trade. In that case, Euro or other local currencies can be used for trading. European nations have not imposed sanctions on Iran. Only dollar is eliminated. Also, we have to see whether there are sanctions on food items. If there are no sanctions on food items then there will be no worry for Indian food item exporters,” an Iranian trader, said. Indian exporters mostly receive payments in rupees for exports to Iran under a mechanism worked out in 2012 when banking channels were restricted due to the US sanctions. Indian companies receive payments for exports to Iran using the oil payments held in rupee balances at Kolkatabased UCO Bank. The mechanism helped India narrow its trade deficit with Iran from about $ 11.3 billion in FY12 to about $ 3.5 billion in FY16 when the sanctions were lifted.