Indian merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran’s dwindling rupee reserves with Indian banks, six industry officials told Reuters.
“Exporters are avoiding dealing with Iran since payments are getting delayed for months,” said a dealer with a global trading house.
Iran’s rupee reserves in India’s UCO and IDBI Bank, the two lenders authorised to facilitate rupee trade,have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.
Under U.S. sanctions, Tehran is unable to use U.S. dollars to transact oil sales.
Iran previously had a deal to sell oil to India in exchange for rupees, which it used to import critical goods, including agricultural commodities, but New Delhi stopped buying Tehran’s oil in May 2019 after a U.S. sanctions waiver expired.
Tehran continued using its rupees to buy goods from India, but after 22 months of no crude sales, Iran’s rupee reserves have fallen, they said Iran’s reserves have reduced significantly and “will be over soon probably because trade has stopped,” said an IDBI Bank official.
