India could lose basmati rice market in Iran to Pakistan as US sanctions disrupt payments

The Print – Tehran and New Delhi explore barter trading options even as Iran has stepped up importing basmati rice from Pakistan. 

India could lose its position as the leading exporter of basmati rice to Iran, with Tehran now beginning to procure the produce from Pakistan, ThePrint has learnt.

For the first time in decades, basmati rice exports from India to Iran have fallen drastically in the first half of 2020-21 fiscal owing to disruption in payments, a result of the US-led sanctions. New Delhi and Tehran are now exploring a conventional barter trading system to address the rising concerns.

The matter was discussed between External Affairs Minister S. Jaishankar and his Iranian counterpart Javad Zarif during the former’s recent visit to that country. Jaishankar had made a stopover in Tehran while on his way to Moscow last week for the Shanghai Cooperation Organisation’s foreign ministers’ meeting .

India and Iran have been discussing the barter trading system for nearly a year now, ever since the Donald 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. New Delhi, however, is yet to firm up its decision, Iranian government sources told ThePrint.

Iran is now importing basmati rice from Pakistan while Indian consignments worth Rs 1,500 crore are stuck owing to payment issues, the sources said, adding that Tehran has now asked New Delhi to quickly move on this decision by utilising the banking channels of UCO Bank and IDBI Bank that continue to maintain a presence there.