Aug 6, 2020
The exporters of Indian basmati rice declared that they are not entering into new contract with Iranian importers so as to avoid any payment-related problems. Meanwhile, tea traders also said that export of teas to Iran may stop within a month if the payment issue is not resolved soon. This would have a severe impact on the trade in orthodox teas as Iran is the biggest buyer of India’s tea segment.
Ambiguity hovers over export of Indian 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. This is the major issue which will affect the trade between the two countries.
Due to payment problems, Indian exporters are stepping back to export the produce to Iran. Meanwhile, tea traders said export to Iran may halt within a month’s time if the payment issue is not resolved soon. This stoppage will impact the trade of tea as Iran is biggest buyer of India’s tea segment.
“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,” informed Vinod Kaul, executive director at All India Rice Exporters Association (AIREA).
According to AIREA data statistics, India has exported around 1.156 million tons of basmati rice in the first quarter of FY20. In April of FY20, India exported 429,000 tons of basmati rice, of which only 50,966 tons 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 and has slowed down greatly. In the current year months of January-March, Iran has imported 9.6 million kg of teas from India, down by 45.36% from the year-ago period. In year 2019, Iran had imported nearly 54 million kg of orthodox teas from India, so the changes in the figures indicate a high fluctuation in graph-wise wave.
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.”
Point to be noted here is the unit price realization of tea exported to Iran has come down to Rs. 262.76 per kg this year from Rs. 266.65 per kg of year 2019.