Payment mechanism remains a barrier with Iran as Indian basmati rice stock of over 2.5 lakh tonnes still stuck at the port. Basmati rice worth Rs 1700 crore stuck at Iranian ports.
Indian Basmati Rice Stuck at Iranian ports
1700 crore worth India basmati rice remains stranded at ports of Iran. The issue has arisen due to problems with the payment mechanism. This has prompted exporters to involve the government to ensure safe payments from Tehran. Iran is the biggest importer of the Indian basmati and accounts for 34% of basmati imports.
Basmati Rice Exporters Complain
AIREA representative confirmed that over 2.5 lakh tonne of basmati rice valued at Rs 1,700 crore stuck at Iranian ports for many months. Exporters complain that the Iranian central bank is not issuing currency to local rice buyers who have delayed unloading. Consequently, they have not received payments for the last two to three months. Further, they said that there was news of clearance of consignments from Bandar Abbas port in Iran. However, nothing is definite yet as shipments are still stuck.
Demand for a Safe Payment Mechanism
Jai Kumar Gupta, CEO at Supple Tek Industries, which exports rice to Iran, said that the exports must be allowed only against advance payments or LC. Satish Goel of Shree Jagdamba Agrico Exports said that UCO Bank and IDBI bank would need a different payment mechanism as they only have around 5,000-6,000 crore in their rupee account to settle for export consignments. Further, Goel said that there the exporters are not taking any new orders because of previous due payments. However, he expects that government interventions may improve the situation by the third quarter of FY 2020-21.
In all, the exporters will keep the basmati rice trade with Iran suspended until they get confirmation on previous payments.