Since the commencement of new Rupee payment mechanism with Iran, country's biggest exporter destination of aromatic Basmati rice, the inordinate delay in settlement of dues of the exporters because of US sanctions have considerably come down.
India launched Rupee settlement mechanism from April 2012 for avoiding US and European Union sanctions under which state-owned UCO bank was appointed as the agency from India which has a tie with four Iranian banks - Parsian, Pasargad, Saman and EN Banks for carrying out settlements of dues.
As per the official data, Iran is the biggest destinations for Basmati rice and the country had imported 3.2 million tonne of aromatic rice during 2011-12. Out of total imports, close to 1.5 million tonne is shipped from India for meeting Iran’s domestic demand.
Industry sources said Basmati rice exporter from India could not settle their dues with Iran due to US sanction after payment route through Dubai was also closed for the exporters earlier last year.
“The payment settlement mechanism worked out with Iran has considerably reduced time taken for settlement. However there are teething problems,” MP Jindal, President, All India Rice Exporters Association (AIREA) told FE.
Jindal said that time taken for settlement of payment once Basmati consignment reaches Iran at present ranges from 30 – 45 days, which should be brought down to around 15 – 20 days.
The two countries launched a payment mechanism June last year to avoid western sanctions against Iran by essentially exchanging Iranian oil for a range of Indian goods, including rice, soymeal and pharmaceuticals. Indian oil importers deposit rupees into an Indian bank, while rice traders and other exporters withdraw funds once their shipments have been received.
However, the Rupee payment mechanism is not allowed in non-oil import from Iran and private remittances.
As per the Agricultural and Processed Food Products Export Development Authority (Apeda) data, the country's cumulative exports of Basmati rice rose from a modest Rs 2,792 crore during 2006-07 to to more than RS 15,082 crore worth of exports achieved for 2011-12, a massive five fold rise.
The exports are expected to cross Rs 16,000 crore mark