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Fresh US sanctions on Iran may jeopardize India’s farm exports

Saturday, Jan 11, 2020

 

By Shrikant Kuwalekar and Preeti Bhagat

 

MUMBAI – Fresh sanctions slapped by the US on Iran on Friday are likely to have an adverse impact on India's agricultural exports, as the west Asian nation will not be able to pay for imports in foreign currency, which is the US dollar.

 

"There is uncertainty over payments as the letter of credit issued by Iranian entities earlier against imports from India can't be honoured after the latest round of sanctions," said an official with a Pune-based sugar trading company.

 

The US on Friday imposed penalties on Iran to target multiple sectors of the Islamic Republic's economy–including construction, manufacturing, textiles and mining–and named eight top officials, some of whom were already under sanction.

 

"We have learnt that a shipment of 30,000 tn basmati rice destined to reach Iran is held up at Kandla Port due to uncertainties emanating from the sanctions," said Vijay Girase, proprietor of Al Sucrose Corp, on the sidelines of All India Sugar Trade Association Sugar Conclave 2020 here today.

 

Girase, who is also an adviser to Ratnagiri-based JSW Port on the western coast, added that two shipments of 40,000 tn each of sugar, already shipped to Iran, are also waiting to be unloaded amid lack of clarity on how the deal could be settled financially.

 

Iran is a major destination for a number of farm commodities such as tea, sugar, basmati and non-basmati rice among others from India. The West Asian country accounted for around 30% of India's total sugar exports in 2018-19 (Oct-Sep), pegged around 3.8 mln tn. The country is also a leading buyer of Indian basmati rice, with purchases totalling 1.4 mln tn in 2018-19 (Apr-Mar).

 

Earlier in 2019, receipts against Indian exports were adjusted against the payment for import of crude oil from Iran. However, the window was closed in June last year after India had to stop import of oil following US sanctions.

 

In the current sugar year so far, export deals of 600,000-700,000 tn of sugar have already been contracted for Iran, of which 400,000 tn have been shipped out, trade sources said.

 

"Renewed tensions between Iran and the US is expected to lead to India falling reasonably short of achieving its 6-mln-tn export target set by the government," said a procurement head of India's leading fast moving consumer goods company.

 

Trade officials said that India's exports to Iran could be streamlined if it is routed via other west Asian countries.  End

 

Edited by Ramya J.S. D'Rozario

 

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