NEW DELHI : The Reserve Bank of India’s move to put in place a mechanism to settle international trade in rupees will boost tea and basmati rice exports to Russia and Iran, where they had been facing problems over payment. Russia and Iran are major buyers of Indian tea and the latter is also a major destination for basmati rice. Both these countries are facing Western sanctions.
India annually exports around 45 million kg of teas to Russia. But due to the ongoing war between Russia and Ukraine and the sanctions from the US and Europe, tea exports have fallen by 10% to the country in January-April against the same period last year.
Mohit Agarwal, Director, Asian Tea, a leading tea exporting firm, said “The government’s move will help to sort out the payment issue. It will not only increase tea exports to Russia and Iran but will also help India to increase its tea exports to the UAE, Kazakhstan and China, and will remove the currency risk from our balance sheets.”
“Overseas buyers can now open vostro account with an Indian bankNSE -0.60 % and they can make payments in INR to Indian exporters. The forex risk gets transferred to the overseas buyer as the rupee amount is fixed (since invoiced in INR),” explained Abhishek Goenka, Founder and CEO, IFA Global.
In 2019, India exported 53 million kg of tea to Iran. Ever since the US imposed sanctions on Iran, India could not engage in dollar-denominated trade. Hence, a rupee-rial trade mechanism was put in place in 2018.
