Merchants halt exports to Iran as its ~ reserves fall
Merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran's dwindling rupee reserves with
Indian banks, six industry officials told Reuters.
“Exporters are avoiding dealing with Iran since payments are getting delayed for months,” said a Mumbaibased dealer.
Iran’s rupee reserves in UCO and IDBI Bank , the two lenders authorised to facilitate rupee trade, have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.
Under US sanctions, Tehran is unable to use US dollars to transact oil sales.
Iran previously had a deal to sell oil to India in exchange for rupees, which it used to import critical goods, including agricultural commodities, but New Delhi stopped buying Tehran's oil in May 2019 after a US sanctions waiver expired.
Tehran continued using its rupees to buy goods from India, but after 22 months of no crude sales, Iran's rupee reserves have fallen, said the sources, who asked not to be named, citing business privacy. Iran’s reserves have reduced significantly and "will be over soon probably because trade has stopped,” said a senior official with IDBI Bank.
The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India.
“Rice exporters are concerned about the current payment mechanism," said Vijay Setia, a rice exporter and former president of the All India Rice Exporters' Association (AIREA).
“There was too much of delay in payments from last year's shipments. Exporters received payments six months after shipments," Setia said.
In the first quarter of 2020 Iran imported nearly 700,000 tonnes of basmati rice from India, but in the same period this year shipments would be “very negligible,” Setia said.
According to officials, Tehran continued using rupees to buy goods from India, but after 22 months of no crude sales, Iran's reserves have fallen