Pakistan's rice exporters are raising concerns about the lack of letters of credit (L/Cs) for exports to Iran if Tehran lifts its year-long ban on Pakistani rice imports.

The lack of L/Cs means Pakistan will not be able to compete in the lucrative Iranian rice market with India, which has preferential currency arrangements with Iran according to the chairman of the Rice Exporters Association of Pakistan, Shafique Ch.

Banking channels

"Only effective and reliable formal banking channels for currency transfers...can revive rice exports from Pakistan," he told local media.

Ch said Pakistan's rice exports to Iran had declined from about 0.45 million tons to around 0.12 million tons annually due to the lack of a currency swap agreement.

Indian competition

He said Iranian buyers had switched allegiance to India due to the availability of currency swaps and currency transfer channels as well as preferential exchange rates.

Pakistan's prospects for resuming sales of rice to Iran are further compromised, according to Ch, by the inability of local banks to arrange L/C transactions for exports.

India now provides nearly 90 per cent of Iran's imported rice, he added.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.