Indian basmati rice and tea exporters to Iran facing uncertainty

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Uncertainty looms over export of basmati rice and tea to Iran as the Central Bank of Iran has slowed down allocation of currency against which Iranian traders were buying these commodities from India.

Indian basmati rice exporters said they are not entering into new contract with Iranian importers so as to avoid any payment-related problems.

Meanwhile, tea traders said export to Iran may stop within a month if the payment issue is not resolved. This would impact the trade in orthodox teas as Iran is India’s biggest buyer in this category.

“Getting payment from Iran has become a major issue. There is no clarity on whether the rupee reserve of UCO Bank and IDBI Bank has come down or not. Exports to Iran in the first quarter have fallen significantly due to the lockdown. The exporters are not doing any new contracts with Iran,” Vinod Kaul, executive director at All India Rice Exporters Association (AIREA), told ET.

India exported 1.156 million tonnes of basmati rice in the first quarter of FY20, according to AIREA statistics. According to Kaul, in April of FY21, India exported 429,000 tonnes of basmati rice, of which only 50,966 tonnes were exported to Iran.

“The figures for May and June are yet to be compiled, but according to information from trade, exports in May were more or less similar to that in April . But in June and July there has been drastic reduction in exports to Iran, as the payment issue has upset basmati exporters,” Kaul said.

Gautam Miglani, owner of LRNK, a Haryana-based basmati rice exporter, said his firm is receiving payments for consignments to Iran that were shipped before the Covid-19 outbreak.

“The payment is very slow and it is coming in small tranches. It is becoming impossible to do trade with Iran. The Indian government should work out a deal with Tehran so that exports can be carried out smoothly,” said Miglani.

Tea exports to Iran have already taken a hit in the first three months of 2020.

In the January-March period of the current year, Iran has imported 9.6 million kg of Indian teas, down 45.36% from the year-ago period. In 2019, Iran had imported nearly 54 million kg of orthodox teas from India.

Anish Bhansali, managing partner, Bhansali & Company, and a tea exporter to Iran, said, “Payment is not coming from Iran on a regular basis. If this trend continues, then exports will come to halt within a fortnight or by the end of this month.”

Mohit Agarwal, director, Asian Tea, said, “Till Friday, no payment was coming. But on Saturday some payment came from Iran for the teas shipped in May. But payments are being delayed. We are hoping that things will improve shortly so that orthodox tea exports pick up to Iran and prices revive.”

Unit price realisation of tea exported to Iran has come down to Rs 262.76 per kg this year from Rs 266.65 per kg last year.

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Tagged basmati rice, , Indian exporters, Iran, tea

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