India’s basmati rice exports may drop by 7.2% in the first quarter of the current fiscal

Agricultural and Processed Food Products Export Development Authority’s (APEDA) data shows that India’s shipment of basmati Rice has declined by 7.2 per cent to 1.17 million tonnes for the April-June period, first three months of the 2018-19 financial year, as compared to the same period last year.

Default by Iranian importers on some Indian basmati rice brands under bilateral deals have hit India’s export of these products in the June quarter. The government has cautioned exporters to avoid private transactions with Iranian importers.

Many such transactions are done on a private basis without involving banks and regulators. Informed sources say. A number of importers dealing primarily with private basmati exporters have defaulted in making payment of around Rs 500 crore.

According to trade sources, some Indian exporters were dealing privately with Iranian importers without opening of Letters of Credit, which guarantee the receipt of money from importers. According to the APEDA official, around a third of India’s basmati exported to Iran faces threat of default.

Iran is the largest importer of India’s branded and unbranded aromatic rice (it took a third of all its export in the June quarter. Hit by trade restrictions from America, Iranian importers pay to Indian basmati exporters in rupees.

Usually, exporters get a certificate from APEDA and proper processes are followed. “We have taken up the issue with the trade ministry in Iran. But, it seems, Indian exporters would have to go only through the legal route to recover the money,” said an APEDA official.

APEDA has advised exporters not to register contracts for export of basmati or make arrangement for payment before applying to the government body in this regard. Exports should be against formal orders which include quality specifications and a mechanism for resolution of disputes.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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