Iran’s trade with India fell 6.19% in January 2023 compared with the same month of last year to stand at $197 million, latest data released by the Indian Ministry of Commerce and Industry show.
Iran’s exports stood at $68 million, registering a 122.07% rise compared with the previous year.
The exported goods mainly included dye intermediates worth $33 million, petroleum products worth $20 million and fresh fruit worth $12 million.
Iran’s imports from India during the period stood at $129 million, registering a year-on-year decline of 27.97%.
The imports mainly included rice worth $83 million, organic chemicals worth $6 million, tea worth $6 million, fresh fruits worth $5 million and peanuts worth $3 million.
Bilateral trade hit $2.5 billion in 2022, with Iran’s export standing at $653 million and imports at $1.84 billion.
Iran, Saudi Arabia, UAE Account for Half of India’s Rice Exports
India’s basmati rice exports surged by 17% in volume during the first three quarters of the current fiscal year (ended Dec. 21, 2022), while exporters are earning at least 20% more on average in overseas markets as Iran, Saudi Arabia and the UAE together bought half of India’s total shipments of the aromatic rice, The Hindu Business Line reported.
According to the latest data from India’s Agricultural and Processed Food Products Export Development Authority, the shipments of basmati rice increased to 3.2 million tons in April–December of the current fiscal from 2.74 million tons in the year-ago period. However, in terms of value, the surge was 40% to $3.34 billion from $2.38 billion.
Due to the depreciating rupee, the growth is even higher, i.e., 50.5% in Indian currency, which amounted to ₹26,591 crore against ₹17,664 crore. In fact, export realization in basmati rice increased to $1,044 per ton this fiscal from $868 per ton a year ago.
Prices did not increase from the average received ($1,057) in April-September, contrary to what was expected. Though traders and exporters paid record-high prices for basmati paddy this year anticipating a huge jump, it is a win-win for all stakeholders — farmers, exporters and consumers.
Recalling the 2013-14 price spiral in basmati, an industry player said exports may not rise that high over the next two months as contracts are happening at an average of $1,100-1,200/ton, though some are getting premiums and selling at $1,350 for limited quantities.
In 2013–14, India exported 3.76 million tons of basmati worth $4.87 billion, a record high in value terms, realizing an average of $1,295 per ton.
“That was an exceptional year as Iran had bought nearly 1.5 million tons of basmati from India whereas the traditional top buyer Saudi Arabia imported around 0.8 million tons,” said an industry veteran who has been tracking basmati prices for the last two decades.
Converging Interests in Trade, Connectivity
New Delhi and Tehran have converging interests in trade and connectivity, according to The Diplomat.
Iran’s full membership in the Shanghai Cooperation Organization, where India is also a member, could accentuate mutual efforts to focus on connectivity projects like Chabahar Port, which links India with the International North-South Transportation Corridor.
Since India began operations at Shahid Beheshti Terminal of Chabahar in late 2018, it has handled bulk cargo transshipments from Australia, Bangladesh, Brazil, Germany, Russia and the UAE.
Experts say the throughput can be significantly enhanced, if the port is linked to the rail network.
India took up the development of Shahid Beheshti Terminal under a tripartite agreement on Chabahar signed with Iran and Afghanistan in May 2016. Afghanistan is effectively no longer part of the arrangements since the takeover of the country by the Taliban last year, though the port has benefited from a US waiver on sanctions imposed on Iran.
India pledged to invest $85 million in the terminal and has so far supplied cranes and other equipment worth $24 million. The people pointed out there is a need to expedite the supply of more equipment such as heavy gantry cranes for transferring cargo from ships to land.
India and Iran are close to striking a long-term agreement for operations at the strategic Chabahar Port, with the matter held up only by differences on a clause related to arbitration, Hindustan Times reported recently, citing people familiar with the matter.
The long-term agreement, valid for a period of 10 years and to be extended automatically, is meant to replace an initial pact that covered India’s operations at Shahid Beheshti Terminal and has been renewed on an annual basis.
The move comes at a time when China has been showing growing interest in investments in ports and other coastal infrastructure in Iran, and the Iranian side has been pressing New Delhi to step up development of Shahid Beheshti Terminal, which is operated by the state-run India Ports Global Limited.
The long-term agreement figured in discussions during the Indian Shipping and Waterways Minister Sarbananda Sonowal’s visit to Iran in September, especially his meeting with Iran’s former roads and urban development minister, Rostam Qasemi.
The issue holding up the long-term agreement is not major and relates only to jurisdiction for the arbitration of differences on any matters, the people said.
Under Iran’s Constitution, such arbitration cannot be referred to foreign courts, and a proposal under the agreement would require a constitutional amendment, which would be difficult, they pointed out.
Both sides, however, are hopeful of the speedy resolution of this matter, as legal and technical experts are working on it, the people said.
At the same time, the Iranian side has been pushing India to speed up the development of its operations at Chabahar Port, including the completion of the 700-km Chabahar-Zahedan railroad.
Less than 200 km of this crucial rail link remain incomplete and in the face of hesitation to deal with a construction company with links to the US-sanctioned Islamic Revolutionary Guards Corps, Tehran has suggested a contract can be finalized by the Indian side with another entity, the people said.
During Sonowal’s visit, the two countries decided to form a joint technical committee for the smooth functioning of the port.
India remains “fully committed to develop Chabahar Port to realize the vision” outlined during Indian Prime Minister Narendra Modi’s visit to Iran in 2016, Sonowal said at the time.
