25% US tariff: Shipments of rice & tea to Iran stalled

Humanitarian trade under cloud of uncertainty too

- SANDIP DAS & MUKESH JAGOTA

SHORTLY BEFORE THE US President Donald Trump announced a 25% additional tariff on countries trading with Iran, India's shipments of rice and tea to the West Asian country fell to a trickle.

Basmati rice and tea have remained items which India continued to export in substantial quantities to Iran, after the November 2018 imposition of Office of Foreign Assets Control (OFAC) sanctions.

The OFAC sanctions regime included a waiver on 'humanitarian grounds' for trade in food and medicines, among other essentials. Civil unrest in Iran and the imminence of additional US sanctions have caused delays in payment settlements for rice and tea exporters and fall in domestic mandi prices of several varieties of basmati rice, trade circles said, adding that as a precautionary measure, shipments have been “temporarily halted.”

EXPORTERS SAID THE crisis extends beyond direct trade with Iran as transit trade through Iran, particularly via the strategic Bandar Abbas port serving the routes to Afghanistan, Turkey, and Russia, has also been impacted.

However, officials here said trade between India and Iran is ‘fully compliant’ with the earlier (OFAC) sanctions regime. There is no clarity on whether the remaining trade in food and pharma would be covered by the new announcement by President Donald Trump, they added.

The OFAC sanctions of the US Department of Treasury brought down bilateral trade between India and Iran sharply from 2019. India's total merchandise trade with Iran peaked at $17 billion in FY19 (imports of $13.5 billion, dominated by petroleum products, and exports of $3.5 billion), mostly rice and tea.