India which had a major trade deficit with Iran earlier, now also looks at the barter trade possibility to avert payment imbalances.KOLKATA: The Uco Bank and IDBI Bank-controlled payment mechanism to Indian exporters to Iran is facing hurdles. The funds lying with these Indian banks, received from oil importers earlier, is depleting since there was no inflow since May 2019 as India stopped importing oil from Iran post the US sanction.
So much so, that these banks and traders are exploring the possibility of importing non-oil goods such as fruits from Iran to revive fund inflows to the rupee-accounts designated for India-Iran trade. There was no US sanction on Iran’s fruits and vegetable exports.
“There has been no fresh inflow into the rupee-account for India-Iran trades since May 2019,” said Uco chief executive AK Goel, adding that a possibility of importing fruits from Iran is being explored. He did not share the details but said the bank still has funds to pay exporters.
Under the India-Iran trade deal, local oil refiners used to import crude oil from the middle east nation and make payments to the designated rupee-account at Uco and IDBI. This was till the time crude oil was in the exempted list of US sanctions. These banks, in turn, use that fund to settle payment to exporters.
Fruit Imports from Iran can generate anything between Rs 3000-4000 crore a year, traders said. Iran grows 50 different varieties of fruit including apple, pomegranate and oranges.
“Fund position with Uco and IDBI Bank is low. They have funds to meet payment of 1.5 million tonnes of rice exports to Iran,” said Satish Goel, vice president of All India Rice Exporters Association and chairman of the Iran committee on rice.
India which had a major trade deficit with Iran earlier, now also looks at the barter trade possibility to avert payment imbalances.
“The bank is also looking at the barter trade option. India can import fruits and saffron from Iran and in return can export tea,” a senior tea industry executive said.
Iran, on the other hand, has seen its non-oil exports, amounting to $41.3 billion in 2019-20, exceeding oil exports for the first time in its modern history.
Iran mostly imports rice, tea and pharmaceutical goods from India and is the largest importer of Indian basmati rice with the country buying 4.4 million tonnes annually at an estimated value of Rs 1.6 billion.
At present, consignments of over 2 lakh ton of basmati rice worth about Rs 1700 crore are lying at Iranian ports as the Central Bank of Iran is yet to make any allocation.
The rice exporters have sought the government’s help to ensure steady payments.
Source: indiatimes.com