Iran imported about 598,000 tonnes of Indian basmati between April and November, according to the Indian Rice Exporters Federation (IREF).Also Read: India can’t shake Iran’s ghosts as Trump opens new box of worries
“Importers in Iran have reported their inability to remit payments and honour their contracts. There is no communication with Iranian buyers,” said IREF vice-president Ved Garg. The disruption has led to uncertainty for exporters already nervous about US President Donald Trump’s threat to impose an additional 25% tariff on countries having trade with Iran.
Uncertainty in Iran has impacted the prices of basmati rice in India’s wholesale markets. Over the past week, prices of key basmati varieties have dropped by 7%.
Since the current protests erupted in Tehran, retail outlets in Iran are closed, Garg said. “There is no internet connection too and we cannot reach out to our buyers. Basmati rice from India is lying at the Iranian ports,” he said.
Prem Garg, IREF’s national president, said the body has issued an advisory urging exporters to reassess risk exposure on Iranian contracts, adopt secured payment mechanisms, and avoid overleveraging inventories meant exclusively for Iran. “We are not sounding an alarm, but urging prudence. In periods of geopolitical and internal instability, trade is often the first casualty,” he said.
Also Read: Iran unrest hits Indian basmati rice exports, industry body says
“We have appealed to the exporters to diversify into alternative markets across West Asia, Africa and Europe to cushion the impact of any prolonged slowdown in Iran-bound shipments.”Akshay Gupta, head of bulk exports at KRBL, the manufacturer of India Gate basmati rice, said when trade with Iran was fully open, the company was exporting around 250,000 tonnes of basmati rice to that market.
However, over the years, sanctions and increased market restrictions have considerably impacted the business.
“Today, our current exposure to the Iran market is limited at around $8-10 million. Considering the limited trade to Iran, we have been doing the majority of our trade through the UAE, where Iranian importers operate locally,” Gupta added.
According to industry estimates, a tonne of basmati rice now costs $900.
Rice exporters said Trump’s tariff threat to countries continuing trade with Iran created a lot of confusion in the market. “It is not clear whether this 25% tariff is over and above the 50% tariff which the US has already imposed on us,” the IREF president said.
US had imposed 50% tariffs on India last year. However, basmati rice exports to the US have not seen any impact in the first three months after the tariffs came into effect in August. In the period September to November, India exported 75,839 tonnes of basmati rice to the US as compared to 65,658 tonnes in the same period of the previous year.