Domestic Economy

Indian Rice Exporters Require LC From Iran

Indian Rice Exporters Require LC From Iran
Indian Rice Exporters Require LC From Iran

Indian rice exporters have decided to ship basmati rice to Iran only against a letter of credit (LC), or cash due to non-payment of dues amounting to Rs700 crore amid a currency crisis in the Persian Gulf nation, The Economic Times reported.
All India Rice Exporters Association has written to Government Trading Corporation of Iran about their decision, as the latter has failed to pay for the new season crop that arrived in the market in November-December last year and were shipped during January-March. 
The Hindu Business Line had earlier reported that India’s basmati rice exports surged by 17% in volume during the first three quarters of last fiscal year, 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. 
According to the latest data from the Agricultural and Processed Food Products Export Development Authority, the shipments of basmati rice increased to 3.2 million tons in April–December of the last fiscal year from 2.74 million tons in the year-ago period. However, in terms of value, it shows a surge of 40% from $2.38 billion to $3.34 billion. Due to the depreciating rupee, the growth is even higher – 50.5% - in Indian currency, at ₹26,591 crore against ₹17,664 crore. In fact, export realization in basmati rice increased to $1,044 per ton this fiscal year from $868 per ton a year ago.
Prices did not increase from the average ($1,057) received 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, a market 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.

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