Iran, the biggest importer of basmati rice, has started clearing Indian exporters’ debts, which since 2019 have risen to more than Rs 1,700 crore.
This Middle East nation buys about 34% of the rice variety exported from India. However this exchange has been hit by a lack of an efficient payment system.
‘In recent days, Indian exporters have started receiving payments from Iran, which was stuck since 2019,’ said Vinod Kaul, executive director of the All India Rice Exporters Association. ‘UCO and IDBI banks have received more than 52 percent of the payment amount near Rs 900 crore to firms. This is positive thing for the industry.’
According to Mr. Kaul, in the period from April to November 2020, exports of basmati rice to Iran decreased by 25 percent against to the same period in the year 2019. With the arrival of money transfers and the guarantee of payments, exports in this quarter will increase. By the next month, a complete picture will arise,” he added.
Local oil refiners used the India-Iran trade agreement to import crude oil from the Middle-East nation and make payments to the designated rupee account at UCO Bank. There was no inflow of funds into the account, as India did not import crude oil.
In 2019-20, at an approximate value of Rs 8,846 crore, Iran purchased 1.32 million tonnes of basmati rice from India. Exporters stated banks were only advised to export to Iran if payment was made in advance. For the industry, it’s a huge relief to start receiving the payments. We expect the demand to restart ahead of the festive season in Navroz, which is the start of Iran’s New Year. We hope to start with local buyers and the Government Trading Corporation of Iran,’ said Satish Goel of Shree Jagdamba Agrico Export, one of the leading exporter of basmati rice to the Iranian market.
The peak season is from January to March for exports to Iran. During this time, over 40 percent of annual sales occur, said Goel, who is also chairman of the Iran Rice Committee.
A rice exporter based in Sonepat stated Chinese firms are also receiving Dirham payments from UAE-based Iranian agents. In Iran, there is great demand for Indian basmati rice, but exports are not smoother because of delays in payments. Buyers have established offices in Dubai, therefore, and we are now exporting via this route,” he added.
Basmati rice exporters said that any decision to lift sanctions against Iran by the new incoming government in the US could result in an increase in orders