The interim deal between the US and Iran to lift economic sanctions on the West Asian country is unlikely to impact India’s Basmati exports to it, a trade official said on Thursday.
More than 40% of the country’s Basmati exports go to Iran. In the current fiscal, of the total Basmati shipments of 2.2 million tonne, more than 1.1 MT were exported to Iran.
“The deal is unlikely to have an impact on India-Iran trade as it will not affect the rupee payment mechanism. We had a discussion with the Iranian embassy, which observed that the situation is actually opportune for enhancing India-Iran trade,” MP Jindal, president, All India Rice Exporters’ Association (AIREA) said. Jindal said Iranian consumers prefer the Pusa 1121 variety of Basmati rice over any other. “Our data also show the demand for Pusa 1121 is extremely strong, and we can safely say that the demand for Indian rice will always exist,” he noted.
Iran has stepped up Basmati rice imports, especially the Pusa 1121 variety, in the last four years after India and the West Asian country agreed on a rupee payment mechanism.
Commerce ministry sources told FE that an official delegation will be visiting Iran next week for discussions on the future of the rupee payment mechanism.
From about 2 lakh tonne in 2008-09, rice shipments to Iran crossed the 1-million-tonne mark last fiscal. As per AIREA data, Basmati rice exports to Iran exceeded
1.1 million tonne in April-October 2013. In value terms, they crossed $1.2 billion.
India initiated the rupee-settlement mechanism in April 2012 to avoid US and EU sanctions, under which UCO bank was appointed as the Indian agency. The bank has a tie-up with four Iranian banks — Parsian, Pasargad, Saman and EN Bank — for carrying out the settlement of dues.
The two countries launched the payment mechanism in June last year to avoid Western sanctions against Iran. India bought Iranian oil in lieu of a range of Indian goods, such as rice, soymeal and pharmaceuticals. Indian oil importers deposit rupees in an Indian bank while rice traders and other exporters withdraw funds once their shipments have been