Iran Stops Buying Indian Rice And Tea – What Is The Reason?

Last week, Iran has stopped signing all contracts to import tea and basmati rice from India. There is no clarification from Iran for the stoppage, but exporters believe that it is due to widespread anti-hijab protests in the country, as the Economic Times (ET) reported. Shops, hotels and markets have remained closed since the start of the protest nearly two months ago.

Several experts have expressed that this might also be because India and Iran are working on the rupee trade settlement agreement. The report added that Iran imports around 30-35 million kg of orthodox tea and 1.5 million kg of basmati rice from India every year.

“There is no clarity on why suddenly this has happened. We have asked the Iranian buyers but they do not have any clear answer…We have informed the Tea Board and we are waiting for some clarity,” Anish Bhansali, managing partner of Bhansali & Company, told ET.

However, the impact on basmati rice may be lesser as their exports have risen amid high demand from other countries. This is also due to high commodity prices globally amid the Russia-Ukraine war.

In the first eight months of 2022, between January and August, exports of tea from India increased by 14.8 per cent year-on-year (YoY) to 140.28 million kilograms, according to Tea Board data. During the January-August period in 2021, the shipments stood at 122.18 million kilograms (mkg).

However, tea shipments to Iran failed to increase due to economic sanctions imposed by the US on Iran, a report by PTI said earlier in November. Exports to that country marginally increased to 16.40 mkg in the January-August period as compared to 16.06 mkg in the corresponding period last year.

Tea exports rose marginally in other countries also, due to higher shipping and container costs which skyrocketed due to the war between Russia and Ukraine.