Unique: Indian retailers nearly halt exports to Iran as its rupee reserves dwindle

FILE PHOTO: Employees carry a bag stuffed with sugar to load it onto a handcart at a wholesale market in Kolkata, India February 1, 2018. REUTERS / Rupak De Chowdhuri

Center East and Africa

Rajendra jadhav

Nupur Anand

Parisa Hafezi

MUMBAI / DUBAI (Reuters) – Indian retailers have nearly solely stopped signing new export contracts with Iranian consumers for commodities equivalent to rice, sugar and tea, amid warning of the decline Tehran’s rupee reserves with Indian banks, six business officers informed 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 worldwide buying and selling home.

Iranian rupee reserves with UCO and IDBI Financial institution in India, the 2 lenders licensed to facilitate the rupee commerce, have run out considerably and exporters are not sure of being paid on time for brand 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 and not using a 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 in all probability 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 drugs from India.

“Rice exporters are involved in regards to the present cost 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 could 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 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 cost points and I imagine this shall be resolved quickly,” mentioned a senior Iranian official, who requested to not be named because of the sensitivity of the query.

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

As rupee reserves have run out and greenback buying and selling isn’t 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 general 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 Trade.

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 Trade didn’t instantly reply to a request for remark.

Buying and selling homes and exporters have been hoping that new US President Joe Biden may 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, equivalent to permitting oil commerce in rupees,” mentioned a Mumbai-based dealer with a worldwide buying and selling firm.

© 2020 Reuters. All rights reserved.

Supply hyperlink

Previous EXCLUSIVE - Indian retailers nearly droop exports to Iran as its rupee reserves plummet - officers
Next Shares of Black Bear Vitality Sources PLC at the moment are traded at JP Jenkins Ltd.