Indian rice, soya exporters to Iran call for payment guidelines as contracts shrink

Indian companies, engaged in exporting rice and soyabean meals to Iran are requesting that Indian government come up with special guidelines about how to clear payments from Iran.

9 June 2019
ID : 22029
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Indian companies, engaged in exporting rice and soyabean meals to Iran are requesting that Indian government come up with special guidelines about how to clear payments from Iran.

Labourers work at a basmati rice paddy in India

Indian rice and soya bean exporters have asked the government to issue guidelines about the system of payments for exports to Iran because they are unable to sign contracts in the absence of clarity after the US ended India’s waiver from sanctions against Iran, India Times reports.

Iran has remained the largest importer of basmati rice from India in recent years, buying over 30% of the total exports of the commodity from India. It also buys more than a quarter of the 1.5 million tonnes of soya bean meal exported from India.

“We are worried about what will happen with exports to Iran. The government should bring some clarity for the trade,” said Aman Gupta, Managing Director at Shiv Shakti Inter Globe Exports. He said they were currently meeting deadlines of old export contracts.

“Iranian importers usually go for bulk buying like 100-200 containers. At this stage, we are only signing smaller orders of 10-20 containers. Some exporters have even stopped future contracts,” said Gupta.

Iran has been a major destination for the export of soya bean meal, which is used by the livestock and poultry feed industry. “We have been exporting 100,000 tons of soya bean meal every month, which has now come to a standstill because of no clarity on remittance,” said Davish Jain, chairman at Soybean Processors Association of India (SOPA).

He added that good exports from the country had ensured that farmers got remunerative prices, that is, the minimum price that sugar mills have to pay to sugarcane farmers.

Exporters said they were getting payments from the UCO Bank, but have been told informally not to go for letter of credit (LC) transactions owing to the threat of any new US sanctions.

“We are only exporting when money is being sent in advance,” said an exporter from Mumbai.

This has led to volatility in basmati rice prices, they said. According to the trade, basmati rice (1121 variety) has moved from 73 rupees ($1.05) a kg in the first week of May to touch a high of 82 rupees ($1.18) a kg, said an exporter, according to the paper.

“With the formation of the new government at the Centre, we are hopeful of getting some guidelines and directions about the system of payments and trade ties with Iran,” said Vinod Kumar Kaul, executive director at All India Rice Exporters Association (AIREA). Iran imported 1,080,000 tons of basmati rice from India, valued at 7.81 billion dollars, in the 10 months to January 2019.

Earlier, Indian Ambassador to Iran Gaddam Dharmendra had told Iran Chamber Newsroom that the country has already put in place a Special Purpose Vehicle (SPV) to continue trade with Iran in the wake of US sanctions. 

Video: Indian envoy to Iran discusses New Delhi SPV with Tehran

 

 

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