EghtesadOnline: Indian exporters are apprehensive about taking orders from Iran due to the reimposition of US sanctions and this could impact India’s shipments to the Persian Gulf country, the Federation of Indian Export Organizations said on Friday.
FIEO President Ganesh Kumar Gupta said big shipping companies too are not taking consignments to Iran, Press Trust of India reported.
“There is huge export potential in Iran but we are facing payment problems due to the US sanctions. Exporters are very apprehensive about taking orders. Future exports to Iran are looking uncertain,” Gupta said.
Earlier this month, the US reimposed several unilateral sanctions against Iran. The sanctions have targeted Iran’s access to US banknotes and key industries, including cars and carpets, Financial Tribune reported.
Gupta, however, said India’s approval to Iranian Bank of Pasargad to open a branch in Mumbai would help promote trade between the two countries.
Iran is one of the major trading partners of India, as New Delhi imports huge quantities of crude oil from the Persian Gulf country. It was India’s second biggest supplier of crude oil after Saudi Arabia until 2010-11 but western sanctions over its nuclear program relegated it to the seventh spot in subsequent years.
In 2013-14 and 2014-15, India bought 11 million tons and 10.95 million tons of crude oil, respectively, from Iran.
The US administration is piling pressure on India, China and other buyers to end all imports of Iranian oil by November 4 as it looks to choke Iran’s economic lifeline with sanctions over its nuclear program.
India imported $10.5 billion worth of goods, mainly crude oil, from Iran and exported commodities worth $2.4 billion in 2016-17.
Iranian Basmati Importer Defaults
Indian rice exporters have a sum of nearly 1,000 crore rupees (over $140 million) stuck mainly because an Iranian importer has defaulted on payments due for aromatic rice exported to Iran, Business Line reported.
The All India Rice Exporters’ Association claimed that there was a fraud by an Iranian company, but said things are being sorted out with the help of both governments.
“The industry has around 1,000 crore rupees outstanding from Iran,” said Gurnam Arora, joint managing director of Kohinoor Foods Ltd.
According to Vijay Setia, president of AIREA, one particular Iranian importer owes a lot of money to Indian exporters.
It seems that the Iranian firm has siphoned off the funds, he added.
The Iranian government has been giving the currency at a concessional rate to importers so that they can make payments to exporters from India.
The Iranian rial has witnessed a sharp fall of over 100% against the dollar since March this year upon the return of US sanctions and worsening economic conditions.
“Three Indian exporters had given us a complaint which we have forwarded to the Apeda and Indian Embassy in Tehran,” he added.
Rice exporters are also in touch with Iranian Embassy in Delhi. When appraised of the fraud committed by the Iranian firm, a senior official at the embassy assured them of all help.
According to the Agricultural and Processed Food Products Export Development Authority data, Indian firms exported 3,089 crore rupees ($435 million) worth of basmati rice during the first three months of the current financial year.
In 2017-18, Iran imported 8.77 million tons of basmati worth 5,830 crore rupees ($822 million).
Arora said Iran accounts for close to 25% of basmati rice exports from India and as a result, it becomes a major differentiator for basmati rice export.
“Trade may be disturbed due to prevailing US sanctions on Iran but the rice exporters will be able to find newer markets. If nothing else, we may have to look for other markets. China, for instance,” he said.
“We are planning a road show in China soon. It’s true that Chinese people prefer sticky rice, but no harm in trying to introduce them to basmati.”
Apeda is taking a team to China in the third week of September to explore business opportunities there.