- Iran has started clearing dues of Indian basmati exporters amounting to 1700 crores since 2019
- Iran is one of the largest importers of rice
- Lack of an efficient payment system has affected the trade
TAD NewsDesk, New Delhi: One of India’s largest importer of basmati rice has finally initiated clearing the amount owed to Indian basmati rice exporters. Pending since 2019, the dues amount to more than Rs 1,700 crore. Although the Middle East country purchases around 34% of the rice variety shipped out of India, in the absence of an effective payment system, trade between the two countries has been badly affected.
“Indian companies have started getting payments from Iran, which had been stalled since 2019, in the last few days,” said Vinod Kaul, executive director of All India Rice Exporters Association. “Over 52% of the payment amount close to Rs 900 crore to companies has been received through UCO and IDBI banks. This is good news for the industry.”
Further, Kaul added how the basmati rice exported to Iran has plummeted by 25% in the April-November period of 2020 in proportion to the amount exported during the same period of the previous year.
“With the remittances coming and with an assurance of payment, exports can increase in this quarter. A clear picture will emerge by next month,” he said.
Under the India-Iran trade deal, local oil refiners used to import crude oil from the Middle-east nation and make payments to the designated rupee account at UCO Bank. There has been no inflow of funds into the account as there was no import of crude oil by India.
In the previous year, Iran bought 1.32 million tonnes of basmati rice from India at a cost as high as Rs 8,846 crore. According to exporters, banks have advised them to export rice to Iran only on the condition that the payment be made in advance.
“It’s a big relief for the industry to start getting the payments. We expect demand to resume ahead of the Navroz festive season, which is the start of the New Year in Iran. We are hopeful that local buyers and the Government Trading Corporation of Iran will begin,” said Satish Goel of Shree Jagdamba Agrico Export, one of the largest basmati rice exporters to the Iran market.
Traditionally, a majority of the exports (over 40%) to Iran is made in the period of January to March.
Moreover, Basmati exporters are expecting a result in a spike in the orders from Iran as soon as the new US administration lifts the ban on Iran.
Source – Economic Times