New Delhi: Sanctioned by the US, Iran’s found a sweet way to use the cash it’s accumulated from trading oil: purchase sugar from India.
Iran is struggling to spend the rupees it’s made from oil sales to India that are sitting in the South Asian nation’s banks. Meanwhile, sugar stockpiles are stacking up in India after a bumper crop. Now the two have struck a deal that eases each other’s woes—albeit only to some extent.
The Government Trading Corporation of Iran will buy 150,000 tonnes of raw sugar from Indian mills for delivery in March-April, paying in rupees from escrow accounts held at UCO Bank. Indian sweeteners regain access to an old market, which has been dominated by Brazil, the world’s biggest producer and exporter.
This payment mechanism will allow India, which imports nearly 80% of its crude, to comply with the condition that forbids direct fund transfers to Iran for a US waiver from sanctions. It also opens an outlet for India’s swelling sugar reserves as local production exceeds demand for a second consecutive year. The Asia nation, which vies with Brazil as the world’s top sugar producer, is looking to boost exports.
India could potentially sell more commodities to Iran. India imported crude oil worth $12.6 billion from the Persian Gulf country last year, while goods sold—such as basmati rice, oilseed meal and tea—were worth only $2.9 billion, according to India’s Directorate General of Commercial Intelligence and Statistics.