Prices of Indian tea, much of which is exported to Iran, have fallen 9.1 per cent year-on-year as India's banks increasingly turn down requests for rupee-denominated letters of credit (L/Cs) for trades with Iran, according to the Indian Tea Association (ITA). The association's chairman blames uncertainty about trade with Iran after President Donald Trump pulled the US out of a 2015 nuclear pact with Iran and ordered new US sanctions on Tehran.

Industry statement

"We are seeing that banks are not willing to issue rupee-denominated L/Cs for exporting tea to Iran, this has been happening for the past two to three weeks," ITA chairman Azam Monem told local media.

Banks are concerned that they do not breach US sanctions due to concerns over potentially hefty fines if they do.

Solution in prospect

"We are hopeful that there would be more clarity in the weeks to come as both India and Iran are exploring means to continue oil trade and discuss banking channels," he added.

The type of tea generally sold to Iran was fetching a price of 216.63 rupees per kilogramme in July compared with 238.32 rupees per kilogramme a year earlier.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.