Shipments of Indian rice to Iran may soon resume if reports of letters of credit (L/Cs) becoming available for such transactions have substance.

Some Indian exporters have sold no rice to regular buyers in Iran for several weeks, due to difficulties obtaining L/Cs for such trades because of sanctions imposed on Iranian entities.

Rupee denominated

The Reuters news agency has reported that buyers in Iran will be able to open L/Cs in Indian rupees to pay for Indian rice as soon as this week.

The president of the All India Rice Exporters Association, Vijay Setia, told the news agency that Indian exporters should be able to receive payments in the Indian currency for sales to Iran, despite increasing pressure from banking sanctions.

Dubai re-exports

Most Indian rice used to reach Iran via traders in Dubai who then re-exported the rice, often on L/C terms, to the Islamic republic.

Such trades using US dollar-denominated L/Cs organised in Dubai became impossible earlier this month when Iran saw its L/C business with countries in the Gulf halted. (DC World News, 7 February 2012).

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