Payment issue hurts India’s trade with Iran

Export of basmati rice and tea is likely to be severely impacted this year due to delayed payments from Iran on the back of the “depleting balance” in the rupee-rial trade account. This is a sign of worry for India because Iran accounts for  nearly a third of India’s total basmati rice exports and over 21% of the country’s total tea exports. These payments are worth around ₹2,000 crore as per the industry insiders.

“The Central Bank of Iran is not doing currency allocations to importers there (because of the depleting balance in the rupee-rial account). Therefore, a large number of consignments, shipped from India from December 2019 till July this year, have been stuck at Iranian ports and payments for none of these has come so far,” explained  Vinod Kaul, Executive Director, All India Rice Exporters’ Association (AIREA).

In addition to discussions on alternative mechanism for payments, India is also discussing the possibility of India importing fertilisers and some other goods, including kiwi, dates and saffron in lieu of crude oil, to keep the balance in the account is also being explored.