Indian exporters are having a tough time exporting to the Islamic
republic caused due to the new exchange rate strategy adopted by Iran for importers.
Iran is passing through an acute economic crisis, with its
currency plunging to record low levels and prices of food articles escalating.
Iran's currency, the rial, has fallen by about 40 per cent against the dollar
since August.
As a result, Iranian banks have become extremely reluctant
to issue letters of credit (LC) for importers, a crucial link to the
newly-established payment mechanism between India and Iran.
According to Indian exporters, Iranian banks have been
seeking up to 100 per cent margin money for issuing LCs to their importers,
which have shrunk the order book of Indian exporters.
Iranian banks have been especially reluctant to issue LCs
for import of non-essential commodities, which have hit exports in sectors such
as engineering goods from India.
"Since Iran is going through an exchange crisis,
importers of priority sector goods like medicine and pharmaceutical products
are getting LCs. However, for other sectors, it is difficult to get
LCs," said Suranjan Gupta, director, EEPC India.
"We are not getting sufficient buyers in Iran for
exports, as due to the currency crisis, banks in Iran are very reluctant to
issue LCs," said P K Shah, former president, Federation of Indian Export
Organisation.
Source: Business Standard
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