EXCLUSIVE – Indian retailers nearly droop exports to Iran as its rupee reserves plummet – officers

* Merchants are cautious as a consequence of declining rupee inventory in Iran

* Funds are delayed by a number of months, says vendor

* Exports of merchandise like rice, sugar, tea are affected

* Cost points can be resolved quickly, Iranian official mentioned

By Rajendra Jadhav, Nupur Anand and Parisa Hafezi

MUMBAI / DUBAI, March 4 (Reuters) – Indian merchants have nearly totally stopped signing new export contracts with Iranian patrons for commodities reminiscent of rice, sugar and tea, as a result of warning concerning Tehran’s dwindling rupee reserves with Indian banks, six business officers instructed Reuters.

“Exporters are avoiding coping with Iran as a result of funds are delayed by a number of months,” mentioned a Mumbai-based vendor with a world buying and selling home.

Iranian rupee reserves with UCO and IDBI Financial institution in India, the 2 lenders approved to facilitate the rupee commerce, have run out considerably and exporters are uncertain of being paid on time for brand spanking new shipments. , mentioned the vendor.

Underneath US sanctions, Tehran is unable to make use of US {dollars} to promote oil.

Iran beforehand made a deal to promote oil to India in change for rupees, which it used to import important items, together with agricultural merchandise, however New Delhi stopped shopping for oil from Tehran in Might 2019 after the expiration of a waiver from US sanctions.

Tehran continued to make use of its rupees to purchase items from India, however after 22 months with no sale of crude, Iranian rupee reserves plummeted, the sources mentioned, who requested to not be named, citing the privateness of the businesses.

Iran’s reserves have shrunk significantly and “will quickly be over most likely as a result of commerce has stopped,” a senior IDBI Financial institution official mentioned.

The Islamic Republic primarily purchased basmati rice, tea, sugar, soybean meal and medication from India.

“Rice exporters are involved in regards to the present fee mechanism,” mentioned Vijay Setia, rice exporter and former chairman of the Rice Exporters Affiliation of India (AIREA).

“There was an excessive amount of delay in funds in comparison with final yr’s shipments. The exporters acquired funds six months after the shipments, ”Setia mentioned.

Within the first quarter of 2020, Iran imported practically 700,000 tonnes of basmati rice from India, however throughout the identical interval this yr shipments can be “very negligible,” Setia mentioned.

Iran was India’s largest purchaser of basmati rice and sugar final yr. Iran meets greater than a 3rd of its demand for sugar and rice by means of imports, merchants estimate.

Iran’s Ministry of Commerce and the Central Financial institution of Iran declined to touch upon the matter.


“We’re in talks with the Indian authorities and Indian merchants to resolve these fee points and I imagine this can be resolved quickly,” mentioned a senior Iranian official, who requested to not be named as a result of sensitivity of the query.

“The delay in funds is because of US sanctions on the Iranian monetary system which made these funds very troublesome,” he mentioned.

As rupee reserves have run out and greenback buying and selling is just not allowed, sugar exporters are exploring choices to commerce in euros, mentioned Rahil Shaikh, managing director of MEIR Commodities India.

Sugar exporters are specializing in different locations like Indonesia and Sri Lanka, as Iran is unlikely to purchase vital quantities this yr, Shaikh mentioned.

India’s total exports to Tehran fell 42% in 2020 from a yr in the past to $ 2.2 billion, the bottom in additional than a decade, an official from India’s ministry mentioned. Commerce and Business.

The autumn continues into 2021 and in January of this yr exports have been greater than halved from a yr in the past to $ 100.20 million, the official mentioned.

India’s Ministry of Commerce and Business didn’t instantly reply to a request for remark.

Buying and selling homes and exporters have been hoping that new US President Joe Biden might reverse sanctions imposed by his predecessor Donald Trump on the oil-rich nation.

“Exports would rebound even when the Biden administration granted some concessions to Iran, reminiscent of permitting oil commerce in rupees,” mentioned a Mumbai-based dealer with a world buying and selling firm. (Reporting by Rajendra Jadhav, Nupur Anand in MUMBAI and Parisa Hafezi in DUBAI; Extra reporting by Aftab Ahmed; Modifying by Euan Rocha, Sanjeev Miglani, William Maclean)

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