Indian traders have nearly completely stopped signing new export contracts with Iranian consumers for commodities together with rice, sugar and tea, because of warning approximately Tehran’s dwindling rupee reserves with Indian banks, six enterprise officers instructed. “Exporters are fending off coping with Iran seeing that bills are becoming behind schedule for months,” stated a Mumbai-primarily based totally supplier with a international buying and selling house.

Iran’s rupee reserves in India’s UCO and IDBI Bank, the 2creditorsauthorized to facilitate rupee alternate, have depleted extensively and exporters are positive whether or not they could be paid on time for brand new shipments, the supplier stated. Under US sanctions, Tehran is not able to apply US bucks to transact oil sales. Iran formerly had a deal to promote oil to India in change for rupees, which it used to import important items, together with agricultural commodities, however New Delhi stopped shopping for Tehran’s oil in May 2019 after a US sanctions waiver expired.

Tehran persisted the usage of its rupees to shop for items from India, however after 22 months of no crude sales, Iran’s rupee reserves have fallen, stated the sources, who requested now no longer to be named, bringing up enterprise privacy. Iran’s reserves have decreased extensively and “may be over quickly likely due to the fact alternate has stopped,” stated a senior legit with IDBI Bank.

The Islamic Republic become shopping for in particular basmati rice, tea, sugar, soymeal and drugs from India. “Rice exporters are involved approximately the present day charge mechanism,” stated Vijay Setia, a rice exporter and previous president of the All India Rice Exporters’ Association (AIREA).

“There become an excessive amount put off in bills from closing’s shipments. Exporters obtained bills six months after shipments,” Setia stated.

In the primary area of 2020 Iran imported almost 700,000 tones of basmati rice from India, however within side the identical length this yr shipments could be “very negligible,” Setia stated. Last year, Iran become the largest purchaser of India’s basmati rice and sugar. Iran fulfils greater than one-0.33 of its sugar and rice call for thru imports, buyers estimate. Iran’s alternate ministry and Central Bank of Iran declined to touch upon the matter.

Payments Hit through Sanctions

“We are in talks with Indian authorities and Indian buyers to clear up those charge troubles and I accept as true with-it is going to be resolved quickly,” stated a senior Iranian legit, who requested now no longer to be named because of the sensitivity of the matter. “The put off in bills are because of US sanctions on Iran’s economic gadget that has made such bills very difficult,” he stated.

As rupee reserves have depleted and green back alternate isn’t allowed, sugar exporters are exploring alternatives to behavior alternate in euros, Rahil Shaikh, dealing with director of MEIR Commodities India, stated. Sugar exporters are that specialize indifferent locations like Indonesia and Sri Lanka, as Iran is not going to shop for big portions this yr, stated Shaikh. India’s universal exports to Tehran fell 42% in 2020 from a year in the past to $2.2 billion, the bottom in over a decade, stated an legit with India’s Ministry of Commerce and Industry.

The fall is persevering with in 2021 and in January this yr exports greater than halved from a year in the past to $100.20 million, the legit stated. India’s ministry of trade and enterprise did now no longer without delay reply to a request for comment.

Trading homes and exporters had been hoping new US President Joe Biden may want to opposite sanctions imposed through his predecessor Donald Trump at the oil-wealthy country. “Exports could rebound although Biden management affords some concessions to Iran like permitting oil alternate in rupees,” stated a Mumbai-primarily based totally supplier with a international buying and selling firm.