India is the world’s largest rice exporter and commands 40% of the global rice trade. Rice exporters in India have made a decision to export rice to Iran only with the backing of a letter of credit (LC) or cash as the country has payment dues amounting to Rs. 700 crores (amid the Gulf Nation’s currency crisis). One of the biggest importers of Indian basmati rice is Iran.
Current News
The All India Rice Exporters Association (AIREA) has written about their decision to the Government Trading Corporation (GTC) of Iran as the latter failed to make payments for crops that arrived in the market in the new season (November-December last year and shipped during January-March).
Vinod Kaul, executive director of AIREA mentioned, “We have written to GTC that exports can only be done according to rules of the Indian government, which allows exports only through the opening of LC or cash against documents.” “We have yet to hear from GTC.”
GTC had previously been given three months of credit as payment terms. Although there are private basmati rice importers in Iran, GTC now primarily purchases the product through open tenders.
Currency Crisis In Iran
Mr. Kaul mentioned, “There is a severe currency crisis in Iran.” Recent declines in the value of the Iranian rial relative to the US dollar have driven up the cost of imports and reduced the purchasing power of regular Iranians.
By the end of February, the Iranian currency had fallen to about 600,000 rials against the US dollar, from around 300,000 rials in September. This month saw some improvement, but the nation’s high inflation rate is still a major problem. Iranians are turning to the dollar and gold to protect their savings as there is a severe shortage of US dollars due to concerns that US sanctions will likely remain in place as negotiations to revive the 2015 nuclear deal have stalled.
Basmati Rice From India
The price of basmati rice has increased to $300 per tonne internationally, according to Gurnam Arora, joint managing director of Kohinoor Foods, as basmati rice yields in India were lower in the current year. He mentioned, “In the domestic market, prices have appreciated by 30% and have touched Rs 95-100 per kg.”
India produces 8.2 to 9 million tonnes of basmati rice annually. 4.5 million tonnes of this rice are exported to international markets. The nations of the Middle East are the biggest consumers. Iran was the biggest consumer with 1.3 million tonnes of imports prior to US sanctions. At present, the nation imports 0.9 million tonnes of basmati rice from India.
