Indian exports hit by Iran currency crisis

Indian exports hit by Iran currency crisis

With Iran facing a currency crisis in the aftermath of US sanctions, Indian exporters are having a tough time in exporting to the Islamic republic, Business-Standard reported.

For example, Between April-September 2012, exports of engineering goods from India to Iran fell by almost 35% to $205.33 million, against $315.79 million in the same period last year, according to data from Engineering Export Promotion Council.

Iran is passing through an acute economic crisis with its currency plunging to record low levels and prices of food articles escalating. Iran's currency, rial has fallen by about 40% against the dollar since August.

As a result, Iranian banks have become extremely reluctant to issue letter of credit (LC) for Iranian importers, a crucial link to the which the newly established payment mechanism between India and Iran.

Banks in Iran have been seeking up to 100% margin money for issuing LCs to their importers, which have shrunk the order book of Indian exporters, said Indian exporters.

In December 2010, the Reserve Bank of India had scrapped the payments to Iran through the Asian Clearing Union mechanism, after US imposed sanctions on Tehran over its nuclear energy ambitions.

However, with India's energy needs much dependent on Iran, the two countries reached a kind of barter deal around February 2012. Under the new payment mechanism, India pays 55% of the value of oil its imports from Iran in euro payments through Turkey's Turkiye Halk Bankasia.

The remaining 45% of payments on account of crude, are made in rupees through UCO Bank. These rupee resources in turn are being used for making payments for Indian exports. To facilitate a smooth transaction, banks in Iran issue LCs on behalf of Iran's exporters

Iranian banks have been especially reluctant to issue LCs for imports of non essential commodities, which have hit exports in sectors like engineering goods from India.

"Since Iran is going through an exchange crisis, importers of priority sector goods like medicine and pharmaceutical products are getting LCs. However for other sectors it is difficult to get LCs," said Suranjan Gupta, director, Engineering Export Promotion Council.

The EEPC has already taken up the matter with the government in a meeting on November 7.

"We are not getting sufficient buyers in Iran for exports, as due to the currency crisis, banks in Iran are very reluctant to issue LCs," said P K Shah, former president, Federation of Indian Export Organization (FIEO).

India buys around $11 billion worth of oil from Iran - its second-largest crude supplier after Saudi Arabia. However the share of exports is much less at about $2.7 billion in goods.

Subscribe to Trend in Google News! Subscribe
Price indexes of industrial, trade sectors at Uzbek stock exchange rise
Price indexes of industrial, trade sectors at Uzbek stock exchange rise
Uzbekistan’s Bukhara oil refinery discloses volume of its production in 2021
Uzbekistan’s Bukhara oil refinery discloses volume of its production in 2021
Uzbek Central Bank makes decision on its main rate
Uzbek Central Bank makes decision on its main rate
Loading Bars
Latest
Turkey, Qatar agree on ensuring security at Kabul airport
Turkish Parliament speaker pays tribute to memory of martyrs of Azerbaijan's January 20 tragedy
Georgia slightly decreases imports of petroleum gases from Azerbaijan
US will keep probing diplomats’ health incidents: Blinken
Georgia shares data on cement imports from Azerbaijan
Kazakhstan Railways opens tender to buy spare parts
Azerbaijan's metallurgical production increases
Cost of manufactured computers up in Azerbaijan
Central Bank of Turkey makes decision on key rate
President Ilham Aliyev receives Advisor to French President's Cabinet and EU Special Representative for South Caucasus
January 20 tragedy laid foundation for Azerbaijanis' struggle to restore their statehood and independence
Azerbaijan shares data on number of vaccinated citizens
Price indexes of industrial, trade sectors at Uzbek stock exchange rise
Azerbaijan confirms 1,186 more COVID-19 cases, 582 recoveries
Turkish VP tweets about anniversary of Azerbaijan's January 20 tragedy
Kazakhstan talks persons not eligible for support on loan deferrals, write-offs
Uzbekistan’s Bukhara oil refinery discloses volume of its production in 2021
Turkmen enterprise releases its first tablets and smartphones
Azerbaijan is beneficiary of recovery trend in hydrocarbon market - Gazprombank
Technical specifications of Azerbaijan’s Khizi-Absheron power plant revealed
Uzbek Central Bank makes decision on its main rate
Azerbaijan boosts oil exports to Georgia
State Statistics Committee discloses cost of machinery, equipment produced in Azerbaijan
Cars re-export from Georgia to Azerbaijan increases
Uzbekistan’s gas chemical complex reveals volume of its products for 2021
Kazakhstan unveils value of vehicles insurance over 11M2021
Kazakhstan reports increase in monetary base value
Kazakhstan's first president to retain right to speak at parliament and government
Azerbaijani Executive Power in Baku opens tender for purchase of truck spare parts
Tesla Berlin factory to elect works council on Feb 28
Kazakhstan to introduce two alternative ways to repay deferred payments
Introducing hydrogen as energy carrier can raise energy security risks
Impact of large-scale protests in Kazakhstan yet to play out - WoodMac
Azerbaijan's State Agency for Use of Mineral Resources opens tender on survey services
India’s cumulative COVID-19 vaccination coverage exceeds 158.88 Cr
PM Modi to host first ever India-Central Asia Summit in virtual format on Jan 27
Indian NSE world’s largest derivatives exchange for 3rd straight year
Artel launches Innovative Educational Center in Tashkent
Uzbekistan shares data on industrial production in 2021
Events held in Azerbaijani army, dedicated to January 20 tragedy (PHOTO)
Guides to accompany passengers of bus trips to Azerbaijan’s liberated Aghdam, Shusha cities
Can hydrogen market be cartelized?
Azerbaijani NBCO eyes boosting car loan portfolio
Memory of January 20 tragedy victims honored in Azerbaijan's Shusha (VIDEO)
Indian economic recovery yet to attain durability: Icra
Russia records another 38,850 coronavirus cases, highest daily number since Nov 13
PM to launch India-assisted projects with Mauritius counterpart Jugnauth today
Rapid growth of hydrogen to underpin rising demand for nickel, zirconium
Azerbaijani State Border Service to purchase building materials via tender
Iran’s CBI discloses data on balance of bank loans
Uzbek Statistics Committee reveals amount of construction work done in 2021
Azerbaijan's minister of health talks quarantine regime
Turkmen garment factory ramps up production
Iran reveals COVID-19 data for January 20
IEA expects Azerbaijan to increase oil output in 2022
Turkish MoD shares publication on anniversary of January 20 tragedy in Azerbaijan
Work related to Armenia's environmental crimes in Azerbaijan's Karabakh in progress - ministry
Iran’s Bahar Azadi gold coin price continues to rise
Turkish, Armenian special reps to discuss confidence-building measures - FM
IEA evaluates Azerbaijan’s OPEC+ compliance
Kazakhstan crude and condensate production estimated to go up in 2022
European Hydrogen Backbone joined by six more companies
Swiss Expo inks solar power purchase agreement in Poland
Кazakh Electricity Grid Operating Company opens tender to buy spares for vehicles
Turkmenbashi refinery opens tender to purchase necessary equipment
EBRD to allocate loan for Turkey’s renewable energy sector
Azerbaijan develops action plan to provide liberated areas with internet
Georgia shares data on trade turnover with Azerbaijan
Russian MFA talks about expansion of transport corridors within GUAM
Recognise ‘Hinduphobia’ and violence against Buddhists, Sikhs too: Indian envoy to U.N.
Work related to Armenian crimes against Azerbaijanis continues - Prosecutor General
Momentum in India's favour, need to prevail over COVID-19: Deloitte CEO on economic development
Central Bank of Iran shares data on exchange of bank checks countrywide
Proud to hold TEKNOFEST int'l aviation, space, technology festival in Azerbaijan - Turkish Baykar Makina
EU special rep for South Caucasus to visit Azerbaijan
Iran boasts potential to vastly increase exports to Russia
India extends suspension on international flights till February 28
Kazakh Gas Processing Plant opens tender to buy electric engines
Companies from UAE, Netherlands to build solar photovoltaic stations in Uzbekistan
Israel signs $3.4 bln submarines deal with Germany's Thyssenkrupp
Azerbaijan eyes holding clinical trials of Turkovac COVID-19 vaccine soon
Turkmen state concern to purchase material and technical resources via tender
Georgia names main goods in domestic exports in 2021
Azerbaijani minister talks potential omicron infection rate among local COVID-19 patients
Azerbaijani people honor memory of victims of January 20 tragedy (PHOTO/VIDEO)
Iranian banks issue big loans in services sector
UN Resident Coordinator in Azerbaijan expresses condolences in connection with January 20 tragedy
Ambassador of Kazakhstan to Azerbaijan honors memory of victims of January 20 tragedy (PHOTO)
Uzbek association signs agreement with Russian enterprises to develop textile industry
Inflation accelerating worldwide: How Azerbaijan responds?
Azerbaijan honors memory of martyrs of January 20 tragedy by minute of silence (PHOTO/VIDEO)
Turkish embassy in Azerbaijan shares publication on 32nd anniversary of January 20 tragedy
Turkmenistan's TML eyes co-op with Ukraine's Smart Maritime Group
Uzbekistan to strengthen cooperation with Saudi company in energy field
Leadership of Azerbaijani MoD visits Alley of Martyrs (PHOTO)
Georgia’s revenues from tourism to surge in 2022 – Galt & Taggart
Iran provides several loans in trade sector
January 20 events strengthened resolve of Azerbaijani people for independence - aide to president
Embassy of Kazakhstan in Azerbaijan issues statement on 32nd anniversary of January 20 tragedy
Georgia publishes COVID-19 data for January 20
All news