In 2021, the latest financial reports concluded that IDBI and UCO Banks are struggling to maintain Iran's currency reserves in India. Not only this, but US sanctions also concluded that Iran's currency - Rial - is longer effective enough to purchase Oil in US dollars. According to Cybex.in India import-export data, Indian Exporters are on the verge of ending their contracts with Iran. Since the United States and India have trade-relationships running for a long time now, this act of Indian exporters was predictable. Import Export Data record between India and Iran discloses that India exports sugar, tea, and rice at large volume to the Iranian importers.
In the past 30 days, Rial's value has constantly declined. It has also created an impact on Iran's rupee reserves with Indian banking authorities. Hence, the exporters are stepping back from extending their contracts with Iranian importers out of the fear of loss in business. Several Indian exporters have also disclosed that they have not received from Iran's importers for a few months now.
To begin with, it is crucial to note that this is not the first time that Iran and India's import-export data is standing at the stage of loss. In the past, such situations have arisen, and Iran dealt with India to gain rupee reserves by selling oil to Indian importers. But, as the US sanctions state that Tehran is no longer a priority and is unwilling to sell/purchase oil using USD, New Delhi, the capital state of India, is also taking a step back from dealing with Iran.
One of the primary reasons for Tehran's rupee reserve to fall at a high rate in Iran's failure. That's right! In the past two years approximately, the country Iran hasn't made any countable sales of Crude Oil. Thus, for Indian exporters, it is seemingly easier to abandon contracts with The Islamic Republic than tolerating the predictable loss in the future.
The former president of All India Rice Exporters' Association, Vijay Sethia, Indian Rice Exporters haven't received payments from Iranian importers since 2019. Several high-end exporters also mentioned that Iran usually makes the payment for imported commodities after six months of shipment, which is clearly unethical.
According to Cybex import-export data, Iran is one of the largest importers of India's basmati rice and sugar. In the event that the exporters decide to abandon Iran, it will create a very heavy situation for both countries. For now, neither Iran's trade ministry nor the Central Bank of Iran authorities has commented on this issue. Yet, some finance officers of Iran have come out saying that they are in between discussions with IDBI and UCO Banks. According to their statement, India and Iran import-export relationships are far better than described.