Rice, tea exporters to Iran bear the brunt of Iran-Israel conflict

Shipments of a significant quantity of basmati rice and tea, the two major commodities that are exported from India to Iran, are on hold because of the Iran-Israel conflict, putting exporters on wait and watch mode.

Iran is the largest market for Indian basmati rice as 1.2 million tonnes of the total six million tonnes of annual exports go to Iran.

“All shipments and payments are on hold,” said Mohit Gupta, a New Delhi-based rice exporter. “The exporters are talking to the officials and hope for a solution in a couple of days. International price for basmati rice has dropped by $100 a tonne because of the conflict and stocks are beginning to pile up with the exporters,” he said.

One of the major exporters of tea said 20,000-25,000 tonnes of tea goes to Iran from India annually, mainly orthodox tea.

This is the prime season in Assam for the best quality tea. However, because of the conflict, fresh exports to Iran are on hold now, while the teas at ports are likely to be shipped, depending on the buyer.

“There are withdrawals and drop in price at the auction; shipments are stopped and no one knows how the situation will develop, especially with the attacks escalating. Exporters will get the payment only after shipment. Right now, the priority in Iran is for essentials,” the exporter said.

B. Rajesh Chander, member of the Tea Board India, said many of those operating to Iran did not take part in the auctions on Wednesday. “There is fear that exports to countries such as Azerbaijan and Kazakhstan may also get affected in the future if the conflict continues,” he said.

Officials from the Ministry of Commerce and Industry will meet stakeholders from the trade, shipping, and export-oriented sectors on Friday to discuss the problems they are facing due to the Israel-Iran conflict, and how the government could help address these issues.

According to sources, prior to the meeting, the Commerce Ministry sought information and feedback from exporters on the extent of impact due to the Iran-Israel tensions, how they were accommodating these factors, and their expectations.

While these inputs are coming in, exporters said that air freight costs had already increased and sea freight costs too were expected to go up. The exporters are also factoring in a surge in fuel costs and risk insurance premiums.

The Hindu had last week reported that potential closure of the Strait of Hormuz due to the Israel-Iran conflict would add 15-20 days to India’s shipping times, and 40-50% to shipping costs.