India’s Foreign Ministry has been involved in negotiations with Iran to persuade the country to use its hard currency reserves in Indian banks for purchases of sugar and other agricultural commodities from Indian exporters.
India’s Food Secretary Sudhanshu Pandey told PTI news agency on Wednesday that talks with Iran began after exports of sugar to the country declined significantly in recent months because of Iran’s rupee serves shortage in India.
Pandey said Indian authorities were now in talks with Tehran to get the authorization for using Iran’s reserves in other currencies in Indian banks to pay for exports.
“Our negotiations with Iran are on. The Ministry of External Affairs is negotiating. We hope to see a breakthrough soon. We are trying to resolve this by April,” said the Indian minister.
It was not yet clear if Iran would agree to the new mechanism or it would opt for other ways for meeting its sugar import needs.
Iran has been a top customer of Indian sugar over the last years as imports amounted to 1.1 million metric tons last year.
Pandey said it would be favorable for Tehran to continue imports of sugar and other agricultural commodities from India both because of lower price and also because of better transportation arrangements.
He said Iran has other currency reserves in India which could be used for bilateral trade although he would not elaborate.
Iranian government authorities have indicated that the country holds tens of billions of US dollars in banks in other countries for crude sales that took place before the United States imposed its sanctions on Tehran in 2018.