Prices for Indian basmati rice rose 20% from the end of November, on hopes that Iran would resume rice imports following a ban during the harvest season between July and November last year. However, there was bad news for Indian rice exporters at the start of February, when Iran imposed a ceiling on the prices of imports.
Earlier this year, an Indian trade delegation of exporters and commerce ministry officials visited Iran in a bid to promote exports. The delegation visited various departments including the Government Trading Corporation and Trade Promotion Organisation, Iran Chamber of Commerce and Rice Importers Association. However, the new restrictions will not allow Indian exporters to sell their imports beyond 850 USD/tonnes, which is below the usual landed cost of 950 USD a tonnes. This could hamper exports of rice from India if the ban is eventually lifted.
Indian rice exports to Iran surged after India approved a rupee settlement mechanism from April 2012 to avoid sanctions from the US and EU. As a result, rice stocks in Iran remain high after it imported 1.4m tonnes of the cereal from India in 2013/14. As a result, imports subsequently fell to 0.9m tonnes in 2014/15 and 0.7m tonnes in 2015/16.