India starts exporting basmati rice to Iran directly.

NEW DELHI: India has started exporting the premium aromatic rice, basmati, to Iran directly following the new payment mechanism, which allows importers from Iran to make payment in Indian rupee, an industry body said today.

"We have started exporting basmati to Iran directly from April 1 this fiscal as the Iranian traders have agreed to make payments in Indian rupee," All India Rice Exporters Association President Vijay Setia told PTI.

With direct basmati exports the logistic costs will come down and it will help in making the premium rice variety more competitive prompting Iranian traders to buy more, he added.

Earlier, Indian exporters have been selling 80 per cent of basmati in US dollars to Dubai-based traders, who then used to supply the grain to local traders in Iran.

India ships around 1 million tonnes of basmati to Iran every year.

India in 2010-11 fiscal exported 2.2 million tonnes of basmati rice, of which over 80 per cent was shipped to Gulf countries, including Saudi Arabia, Iran, Kuwait and Yemen.

The payment problem with Iran began after the Reserve Bank (RBI) in December 2010 withdrew the Asian Clearing Union (ACU) mechanism under which payments were made to Iran following US sanctions.

However, the government solved the problem with the operationalisation of rupee payment mechanism through UCO Bank.

Also under the new arrangement worked out between both the countries, India will provide incentives for exports to Iran on which the payment is made in rupees.

Source : economictimes.indiatimes.com