India’s basmati rice export to Iran fell by fifth year lowest as its currency worsen

India’s basmati rice export to Iran fell by fifth-year lowest as its currency worsen

India’s basmati rice exports fell by a fifth year on year to the lowest level in four years in 2021, as key importer Iran cut purchases as its currency reserves deteriorated, according to government and industry authorities.

According to government data, the country’s basmati rice exports in 2021 plummeted 20% from the previous year to 4 million tonnes, the lowest level since 2017. Also Read | Basmati shipments to Iran expected to increase as it lifts seasonal ban

Shipments to Iran, India’s largest importer of basmati rice, fell 26% year on year to 834,458 tonnes, according to the statistics.

‘Iran was not active in the market for a few months last year after its currency holdings with Indian banks were drained,’ a Mumbai-based trader with a multinational trading company said.

Iran had agreed to sell oil to India in return for rupees, which is used to import crucial products such as agricultural commodities, but New Delhi ceased purchasing Tehran’s oil in May 2019 when a US sanctions reprieve expired.

Tehran continued to use its rupees to buy commodities from India, but there were no crude sales, reducing Iran’s rupee reserves.

Exports slowed in the middle of 2021, but buying from Iran, Saudi Arabia, and other significant consumers have increased in the last two to three months, according to Vijay Setia, former president of the All India Rice Exporters Association (AIREA).

India, the world’s largest rice exporter, mostly sends non-basmati rice to African countries while also exporting superior basmati rice to the Middle East.

Total rice exports grew about 46 percent year on year in 2021 to a record 21.42 million tonnes, thanks to increasing purchases from Bangladesh, China, and Vietnam. Also Read | Iran clearing Indian basmati rice exporters’ debts of Rs 1,700 crore

According to Setia, basmati rice output in 2021 would be down roughly 15% from the previous year due to decreased area and untimely rains during the harvesting season.

‘Export prices of basmati rice have increased by 20% due to lesser supply, but demand remains strong for February and March shipments,’ Setia added.