After almost a decade, Indian basmati rice exporters have now started direct shipments to Iran.
This follows the operationalisation of a new payment mechanism that allows importers from Iran to make payment in Indian rupee.
Iran is the largest market for Indian basmati and accounts for over 20 per cent of the country's annual shipments.
“The direct shipments to Iran have commenced with the rupee payment system in place. We expect exports to grow by 10-15 per cent this year,” said Mr Vijay Setia, President of All India Rice Exporters Association and Director, ChamanLal Setia Exports. Direct exports to Iran will reduce the logistics costs for importers and may prompt them to buy more, he said.
The US and European Union sanctions against Iran had forced the Indian exporters to route their shipments through third country, the UAE, for the past seven-eight years. Adding to their woes, the recent volatility in Iranian currency had triggered a payment crisis.
As part of the recently worked out bilateral payment mechanism, UCO Bank is the nodal agency from the Indian side while Persian Bank is its counterpart in Iran to facilitate the transactions. . “We are entertaining small orders from Iran,” Mr Setia, said.
KRBL, the country's largest basmati exporters is yet to begin direct exports to Iran. “We are waiting for basmati prices to stabilise,” said Mr Anil Mittal, CMD, KRBL. Basmati prices have shot up by 35 per cent in recent weeks.
“The payment issue is resolved and soon the business should be back to normal. There is a natural acceptance of basmati in India and exports are going to improve,” said Dr A.K.Gupta, Advisor, APEDA.
Currently, the balance of trade is heavily in favour of Iran as India imports from that country about 12 per cent of its crude oil requirements.