{"id":115448,"date":"2021-03-04T13:15:55","date_gmt":"2021-03-04T13:15:55","guid":{"rendered":"https:\/\/precoinnews.com\/?p=115448"},"modified":"2021-03-04T13:15:55","modified_gmt":"2021-03-04T13:15:55","slug":"exclusive-india-merchants-almost-halt-exports-to-iran-as-its-rupee-reserves-fall-officials","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/exclusive-india-merchants-almost-halt-exports-to-iran-as-its-rupee-reserves-fall-officials\/","title":{"rendered":"Exclusive: India merchants almost halt exports to Iran as its rupee reserves fall – officials"},"content":{"rendered":"

MUMBAI\/ DUBAI (Reuters) – Indian merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran\u2019s dwindling rupee reserves with Indian banks, six industry officials told Reuters.<\/p>

FILE PHOTO: Labourers lift a sack filled with sugar to load it onto a handcart at a wholesale market in Kolkata, India, February 1, 2018. REUTERS\/Rupak De Chowdhuri\/File Photo<\/figcaption>

\u201cExporters are avoiding dealing with Iran since payments are getting delayed for months,\u201d said a Mumbai-based dealer with a global trading house.<\/p>\n

Iran\u2019s rupee reserves in India\u2019s UCO and IDBI Bank, the two lenders authorised to facilitate rupee trade, have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.<\/p>\n

Under U.S. sanctions, Tehran is unable to use U.S. dollars to transact oil sales.<\/p>\n

Iran previously had a deal to sell oil to India in exchange for rupees, which it used to import critical goods, including agricultural commodities, but New Delhi stopped buying Tehran\u2019s oil in May 2019 after a U.S. sanctions waiver expired.<\/p>\n

Tehran continued using its rupees to buy goods from India, but after 22 months of no crude sales, Iran\u2019s rupee reserves have fallen, said the sources, who asked not to be named, citing business privacy.<\/p>\n

Iran\u2019s reserves have reduced significantly and \u201cwill be over soon probably because trade has stopped,\u201d said a senior official with IDBI Bank.<\/p>\n

The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India.<\/p>\n

\u201cRice exporters are concerned about the current payment mechanism,\u201d said Vijay Setia, a rice exporter and former president of the All India Rice Exporters\u2019 Association (AIREA).<\/p>\n

\u201cThere was too much of delay in payments from last year\u2019s shipments. Exporters received payments six months after shipments,\u201d Setia said.<\/p>\n

In the first quarter of 2020 Iran imported nearly 700,000 tonnes of basmati rice from India, but in the same period this year shipments would be \u201cvery negligible,\u201d Setia said.<\/p>\n

Last year, Iran was the biggest buyer of India\u2019s basmati rice and sugar. Iran fulfils more than one-third of its sugar and rice demand through imports, traders estimate.<\/p>\n

Iran\u2019s trade ministry and Central Bank of Iran declined to comment on the matter.<\/p>\n

PAYMENTS HIT BY SANCTIONS<\/h2>\n

\u201cWe are in talks with Indian government and Indian traders to resolve these payment issues and I believe it will be resolved soon,\u201d said a senior Iranian official, who asked not to be named due to the sensitivity of the matter.<\/p>\n

\u201cThe delay in payments are due to U.S. sanctions on Iran\u2019s financial system that has made such payments very difficult,\u201d he said.<\/p>\n

As rupee reserves have depleted and dollar trade is not allowed, sugar exporters are exploring options to conduct trade in euros, Rahil Shaikh, managing director of MEIR Commodities India, said.<\/p>\n

Sugar exporters are focusing on other destinations like Indonesia and Sri Lanka, as Iran is unlikely to buy significant quantities this year, said Shaikh.<\/p>\n

India\u2019s overall exports to Tehran fell 42% in 2020 from a year ago to $2.2 billion, the lowest in over a decade, said an official with India\u2019s Ministry of Commerce and Industry.<\/p>\n

The fall is continuing in 2021 and in January this year exports more than halved from a year ago to $100.20 million, the official said.<\/p>\n

India\u2019s ministry of commerce and industry did not immediately respond to a request for comment.<\/p>\n

Trading houses and exporters were hoping new U.S. President Joe Biden could reverse sanctions imposed by his predecessor Donald Trump on the oil-rich country.<\/p>\n

\u201cExports would rebound even if Biden administration provides a few concessions to Iran like allowing oil trade in rupees,\u201d said a Mumbai-based dealer with a global trading firm.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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