Indian rice exporters raise concerns after Iran starts placing orders for basmati from Pakistan

Indian rice exporters raise concerns after Iran starts placing orders for basmati from Pakistan

By

Sutanuka Ghosal

, ET BureauLast Updated: Sep 16, 2020, 05:22 PM IST

Synopsis

A Crisil study has stated that Iran, which imports around 1.3 million tonne of basmati rice annually, is expected to register 20 per cent lower volume from India as payment-related issues continue from last fiscal because of US sanctions.

 

Iran has started placing orders with Pakistan for basmati rice, raising concerns of Indian basmati rice exporters who have stalled exports to the Gulf nation due to non-payment of their dues worth Rs 1,700 crore. However, exporters see this merely as a temporary blip.

“Yes, we have heard that Iran has placed some order with Pakistan recently. It is nothing unusual. However, Pakistan exports 6 lakh tonnes of basmati rice in the world markets whereas India’s exports stands at 4.4 - 4.5 millon tonnes,” said Vinod Kaul, executive director, All India Rice Exporters’ Association (AIREA).

Kaul said that it is a temporary phenomenon and once Iran clears its dues, India will again start exporting to the nation. Iran accounts for 34% of India’s basmati exports to the overseas markets.

Kaul said exporters are anxious about when they get their money back.

“They are extremely worried. Also, if Pakistan gradually increases its presence in Iran, then may be in the long term, it may create some problems for Indian exporters,” he said.

A Crisil study has stated that Iran, which imports around 1.3 million tonne of basmati rice annually, is expected to register 20 per cent lower volume from India as payment-related issues continue from last fiscal because of US sanctions.

India and Iran have been discussing the barter trading system for nearly a year now, ever since the Trump administration began imposing tough economic sanctions on Tehran. Iran has said it will buy basmati rice, sugar and medicines from India in lieu of fertilisers. A final decision is yet to be taken.

Exports with Iran need to be resumed soon as basmati production is expected to be higher this year. In the last kharif season, India produced 7.5 million tonnes of basmati rice. “This year, the acreage has increased and we are expecting 8 million tonnes of rice,” said AIREA’s Kaul.

Gurnam Arora, joint managing director, Kohinoor Foods said Pakistan has been sending basmati rice to Iran through some convoluted business route. “The payment was being made in cash. But with India, Iran has a transparent business model. The buyers may have placed some order with Pakistan to meet temporary demand. This will no way impact Indian exports going ahead.”

Arora added that Iran’s own crop will start coming by October and then the country will not require imported basmati. “Moreover, Indian basmati is superior than basmati from our neighbouring nation,” he added.