Basmati Rice industry is in a panic since Iran payment concerns. Pending payment of basmati rice export to Iran increased to more than Rs 1000 crores. Further, the execution of Iran General Qassem Soleimani created nervousness amongst basmati rice industry. Iran remains the biggest importer of basmati rice from India.
AIREA Advises Caution over Exports to Iran
With US-Iran tensions picking up heat, All India Rice Exporters Association (AIREA) advised exporters to suspend exports to Iran. Exporters are still waiting for payment of around Rs 900 crores for exports till June 2019. The authority warned the exporters not to execute any shipments until the situation clears. During April and November 2019, India exported 23.64 lakh tonnes of Basmati rice worth Rs 17,700 crore. Out of this, only quantity worth Rs 4,500 crores was for Iran. AIREA President Nathi Ram Gupta stated that even exports of two lakh tonnes of rice ordered by the Iranian government through the letter of credit is laying on ports. The trade body predicts around Rs 1500 crore stuck in Iran. The delay in exports will decrease basmati rice prices, result in decreasing farmers income and acutely affect the basmati rice industry.
Iran the Biggest Basmati Rice Importer from India
Despite the opening of fresh tenders of basmati rice by Iran, trade set to severely get affected in 2020. Rice being Iran’s staple cereal, the country is the biggest importer for Indian basmati rice. It accounts for more than one-third of the total rice exports of India. Though Iran imported 1.48 million tonnes of basmati from India in 2018-19, this year the imports are set to fall. Exporters are avoiding taking any further risk due to hostilities between the US and Iran. Basmati rice Industry severely affected by the deteriorating relations between the US and Iran.
Future of Basmati Rice Industry?
Iran imported half a million tonnes of rice till October 2019. The growing tension between the US and the Islamic Republic is likely to hit Indian rice industry. Moreover, the Indian government is planning for an alternative source of crude oil supply since further sanctions by the USA. The officials are looking forward to trading with the West Asian region to reduce dependence on the Gulf countries.
In all, with due payments soaring high, the basmati rice industry may suffer a fallback amid Iran sanctions and political tension.