February 14, 2012

Iranian firm mulls to buy Indian wheat

An Iranian trader is in talks with a private Indian trader to purchase ''a very large quantity'' of wheat, according to trade secretary Rahul Khullar.

Iran is increasingly turning to India for import of essential commodities as US-led economic sanctions are pinching the oil-rich country harder by the day. Indian traders seem more than willing to cash in on the opportunity, as India does not support the sanctions.

''It is not a government to government transaction. The guy has to come here and find someone who sells wheat,'' he added.

Iran and India have long been seeking a solution for bilateral trade payments as the West tightens economic and financial sanctions against the republic over its alleged nuclear weapons programme, which Iran denies having.

India is running out of mechanisms to pay for Iranian crude, which accounts for around 12% of the country's oil imports. Exporting commodities in lieu of cash payments is being actively proposed, according to reports.

However, there are problems here as well - Iran is unable to pay for the commodities it is already sourcing from India, such as tea, rice, and edible oils - basic needs for its 74 million people.

Clearly seeing an opportunity for India in the Western sanctions, Khullar said, "There are UN sanctions which India honours, but those don't cover the vast range of products which India can export to Iran.

"If the European Union and the United States both want to stop exports to that country, please tell me why I should follow suit? Why shouldn't I take up that business opportunity? We shall continue business," the trade secretary said.

India is expected to harvest a record 88.31 million tonnes of wheat in 2012, while government stocks on January 1 stood at 25.7 million tonnes, more than three times the official target for the quarter ending March 31.