Besides the Iranian government's insistence on certification on Good Agricultural Practices (GAP) and ISO 2200, which deals with food-safety management and packaging protocols have also slowed down the exports.
As per the latest data, in the first four months of current fiscal (April-July 2014), Basmati rice exports have declined 12% to 1.19 million tonne, mainly due to slow down in the shipment to Iran.
Sources said earlier Iran used to impose only 10% duty on rice import. However, it hiked the import duty a couple of months ago to protect its domestic farmers. The Iranian rice produce enters the market by July and August.
Last fiscal, the exports of Basmati rice to Iran had reached the highest level at 1.4 million tonne and this year, the shipment is expected to be around one million tonne, said a commerce ministry official.
The official said that depending on the domestic production in Iran, it would review the import duty structure in the next couple of months. Iran imports about 40% of rice requirement and around 80% of the imports is sourced from India.
The commerce ministry official also said an Indian delegation will visit Iran in October to discuss rice export issues. We need a single-window clearance system for our rice exports to Iran so that shipment is stream-lined and remains sustainable, said All India Rice Exporters Association (AIREA) president MP Jindal,
Meanwhile, Iran has also revised the 'accepted level' of arsenic in basmati rice from 150 ppm (parts per million) to 120 ppm and asked Indian exporters to put a tag on each pack of consignment ensuring traceability in case aresenic level is found more than the specified limit.
Apart from Iran, other key destinations for Indian basmati rice are Saudi Arabia, the UAE, Kuwait and Iraq. Non-basmati rice is exported mainly to African countries, including Benin, Nigeria, South Africa and Senegal.
The value of Basmati rice exports in 2013-14 was at Rs 28,187 crore. The country exported 3.7 million tonne of Basmati rice last fiscal.
India had launched a rupee-settlement mechanism from April 2012 with Iran to avoid sanctions from the US and the European Union.
As part of this initiative, state-owned UCO Bank has tied up with four Iranian lenders Parsian, Pasargad, Saman and EN Banks for settlements of dues.