Uncertainty looms over basmati, tea exports after Iran sanctions

New Delhi | Kolkata: Uncertainty looms over tea and basmati rice exports from India as the US intends to fully clamp down on Iran oil exports, say companies and trade association. Industry is concerned as India is an importer of crude oil from Iran and any sanction on Iran can impact trade of other commodities India export. India annually exports 30 million kg of tea and one million tonnes of basmati rice to Iran.

Iranian demand for orthodox Indian teas was very strong from the beginning of the new season that kicks off in April. Similarly, basmati trading companies were sending shiploads of rice since December and were expecting a peak season till June.

“We will be completing the current orders for Iran and after that will wait for a government notification on the way ahead,” said Aman Gupta, MD, Shiv Shakti Inter Globe Export, one of the largest basmati rice exporters to Iran. Gupta said contracts have been signed with Iranian buyers but he was worried if he will get payments on time.

“Officials at UCO Bank have told us that they will entertain export documents and payments till May 4, which is the last date of exemptions for importing Iranian petroleum after US sanctions. Post that, there is no clarity,” added Gupta.

The All India Rice Exporters Association will be taking up the issue with the Ministry of Commerce and UCO Bank to seek clarity, said Vijay Setia, president of the association. “Iran is the largest buyer of Indian basmati rice. We export one million tonne out of our total four million tonne export of the basmati rice to Iran,” he said.

To support Indo-Iran bilateral trade, Indian oil refiners pay in rupees to UCO Bank for importing oil from Iran. The Kolkata-based lender, in turn, paid Iranian exporters for exporting goods to India and used the fund to export basmati rice, tea and drugs from India.