India's basmati rice exports to Iran are likely to be affected because of rising tensions between the US and the Islamic republic, with domestic trade body AIREA asking exporters not to undertake any shipment till the situation improves.
Iran is an important export destination for India and if shipments get affected then it will impact domestic prices and in turn farmers' income, the All India Rice Exporters Association (AIREA) said.
During the last fiscal, India exported basmati rice worth Rs 32,800 crore, of which nearly Rs 10,800 crore worth rice was shipped to Iran.
"In the current situation, it is not possible to export basmati rice to Iran. We have issued an advisory to our members to be cautious and not to execute further shipments till the situation gets clearer," AIREA President Nathi Ram Gupta told PTI.
Tensions in the Middle East ratcheted up on Friday after top Iranian commander Qasem Soleimani was killed in a US drone strike in Iraq.
Basmati rice exports to Iran were hit last year as well following US sanctions on the country.
About Rs 900 crore payment is still pending from basmati rice exported till June 2019, Gupta said.
Non-export of basmati rice to Iran will lead to surplus stock in the country, pulling down the rates and affecting the farmers, he added.
Normally, basmati rice exports start from November onwards when the fresh crop arrives. So far, not much has been exported, he said.
The shipments placed by the Iranian government through issue of letters of credit (LCs) have also been kept on hold. "Some quantity is lying at ports," Gupta said.
Annually, the Iranian government issues LCs for purchase of 2 lakh tonnes of basmati rice from Indian private traders. Rest of the trade is done by private parties from both the nations.
In its advisory, AIREA said: "In view of growing uncertainty, exporters members should take extreme caution not to execute any further shipment to Iran till the situation gets clearer."
"If exporters choose to ship basmati rice to Iran, they will do so entirely at their risk," the advisory added.
During April-November period of the current fiscal, India exported 23.64 lakh tonnes of basmati rice worth about Rs 17,700 crore, of which nearly Rs 4,500 crore exports went to Iran.
A rice exporter said that about Rs 1,500 crore payments could be stuck from Iranian importers.
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