The future of India’s trade with Iran has come under a cloud after the US drone strike in Baghdad killed an Iranian general. The exports of basmati rice, tea and cotton to Iran and imports of dates may come to a grinding halt if India adheres to US sanctions. If it chooses to defy US sanctions, India may have to lose the US market.Tea exporters are also worried over the development as Iran has emerged as the largest importer in recent times. While dry-fruit imports in value terms against overall imports are much less, they are important for that market.
While, basmati exports to Iran, which stood at 33 per cent or about $1.56 billion in 2018-19, had already been facing uncertainty following last year’s sanctions on its crude oil exports, the recent developments have only added to exporters’ woes. In FY20, till October, exports have been $570 million with only 26% share in total.
According to industry sources, Indian basmati payments to the tune of Rs 800 crore are still outstanding of the total payables of nearly Rs 1,200 crore on Iran.
“Any escalation will have its impact on trade, including basmati exports from India. If the situation worsens, it will affect the cargo movements due to several factors, including safety concerns,” All India Rice Exporters Association (AIREA) executive director Vinod Kaul told Business Standard in Saturday.
In the last few months, basmati exports to Iran have been hit badly.
“In fact, Indian exporters had booked good number of orders from Iran, but they are now worried about the safety of consignments and payments,” Kaul said.
Since, the pre-conditions forbade direct funds transfer to Iran for any bilateral trade, India had instituted a rupee payment mechanism.
Turmeric exports hit
Indian turmeric exports have been hit by the US sanctions against Iran, the largest buyer of finger turmeric, or full turmeric. Shipments to Iran are at a standstill since May, say exporters. Apart from food and pharma, demand from the tanning industry in Iran was also rising, which lead to a corresponding increase in turmeric exports.
The other major problem, according to Deepak Mazumdar, director of Deepkamal Exports, one of the leading exporters of turmeric, “The dollar embargo by the US has hit turmeric exports and importers are paying only through select banks, which has been affecting the payments.”
Turmeric exports in first four months in 2019 were higher by 10 per cent to 42,000 tonnes compared to 38,171 tonnes in the same period of last year, said Angel Commodities. Last year, India exported about 133,000 tonnes of turmeric compared to 111,000 tonnes in the previous year. Increasing demand of curcumin, a substance found in turmeric, in the pharmaceutical, food and cosmetic industries is a major factor driving the growth of the spice in the global market.
(with inputs from Dilip Kumar Jha)
Source: Business Standard
