The Iran payment crisis has not only affected the payments of Indian crude oil refiners to Iranian companies but also Indian exporters in engineering and manufacturing sectors who could not realise their payments due to absence of a suitable mechanism.

What is more important is that Indian companies are failing to bid for projects as they cannot even offer a bank guarantee necessary for bidding or accepting the contracts.

According to IFGL Refractories Ltd, a Kolkata-based refractory supplier to steel plants, the stalemate has blocked payments due to the company and is also robbing Indian companies of market opportunities in the West Asian economy.

According to a company official, while India is still mulling introduction of a rupee trade mechanism, China and Korea have already introduced local currency-based payment mechanisms.

Hence, “Chinese and Korean companies are grabbing most of the refractory contracts from the expanding steel sector in Iran”, the official said. Iran has 12-million-tonne steel making capacity, which will be expanded to 20 million tonnes in a couple of years.

“Iran may not be the biggest export market available but it is a significant market and we can't let the opportunity go. While Indian authorities are more occupied with resolving the payment issues, a solution needs to be in place urgently to allow Indian exports to that country to grow,” the official said.

The Rs 175-crore company, which exported over Rs 6 crore worth of goods to Iran a few months ago, is yet to realise payments.

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