NEW DELHI–After months of negotiations, India is making progress toward a deal to export some of its surplus wheat to Iran, two people with knowledge of the talks said Monday.
Iran had expressed an interest in buying Indian wheat as early as March but had objected to the quality of the grain because of the presence of traces of a fungal disease in India’s main wheat-growing provinces.
However, following a diplomatic push, Iranian officials have dropped their objections, said a senior government official, who asked not to be identified.
An Indian farm ministry official said Iran’s objections concerning the Karnal Bunt fungal disease made little sense because it had been purchasing wheat of similar quality from Pakistan.
India this year moved to cut its imports of Iranian crude oil because of Western sanctions targeting Iranian crude-oil exports. But the two countries agreed to a rupee payment mechanism in June that enables India to effectively bypass Western sanctions targeting Iran’s financial transactions and export a wide range of commodities to Iran.
“After the opening of the rupee trade, things are stabilizing,” said Rafeeque Ahmed, president of the Federation of Indian Export Organizations, who also confirmed that the Iranians no longer objected to the quality of Indian wheat based on traces of the fungal disease.
Signing of a deal with Iran would enable India to reduce its overflowing wheat stocks as it prepares to harvest what could be a third-straight bumper crop, government officials said. The Indian government hopes to export up to 3 million metric tons to help clear storage space ahead of the harvest of the new crop.
India may initially export 1 million tons of wheat to Iran if a deal is reached, the senior government official said.
The uptick in monsoon rainfall in September may help the country reap a third-consecutive record wheat crop after fears that insufficient rain in June and July would hurt output, said Veena Sharma, director of the state-run Directorate of Wheat Research.
“This change in climate is abrupt but good for us. If the production increases at the same rate as last year due to introduction of better crop varieties, we can touch about 100 million metric tons,” she said.
The output would also depend on favorable temperatures, she said.
India produced a record 93.90 million tons of wheat in the crop year that ended June 30.
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