All India Rice Exporters Association (AIREA) has written to Government Trading Corporation (GTC) of Iran about their decision as the latter has failed to pay for new season crop that arrived in the market in November-December last year and shipped during January-March.
“We have written to GTC that exports can only be done according to rules of the Indian government, which allows exports only through opening of LC or cash against documents,” Vinod Kaul, executive director of AIREA told ET, “We have yet to hear from GTC.”
Earlier, GTC was given payment conditions of three months of credit.
Though private importers in Iran do import basmati rice, these days GTC is mostly buying the commodity through floating of tenders.
Iran is one of the largest buyers of basmati rice from India.
“There is a severe currency crisis in Iran,” Kaul said.The Iranian rial has tumbled significantly against the US dollar in recent months, making imports far more expensive and sapping the purchasing power of ordinary Iranians.
From about 300,000 rials against the US dollar in September, the Iranian currency slumped to about 600,000 rials against the dollar by February end. It has made some recovery this month, but the country continues to reel under high inflation.
There is also an acute shortage of US dollar in Iran as Iranians are turning to the greenback and gold to protect their savings amid fears that the US sanctions are likely to remain as talks to revive the 2015 nuclear deal are stalled.
Gurnam Arora, joint managing director of Kohinoor Foods, said prices of basmati rice internationally have risen to $300 per tonne as the yield of basmati rice in India has been less this year.
“In the domestic market, prices have appreciated by 30% and have touched Rs 95-100 per kg,” Arora said.
India’s annual basmati rice production hovers between 8.2-9 million tonnes. Of this, 4.5 million tonnes of rice are exported to the global markets. The largest buyers are the Middle East countries.
Before the US sanctions, Iran was the largest buyer with 1.3 million tonnes of imports. Now, the country buys 0.9 million tonnes of basmati rice from India.
