The Telegraph
Tuesday , November 8 , 2011
Since 1st March, 1999
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Tea exporters see end to Iran impasse

Calcutta, Nov. 7: Tea exporters believe Iranian buyers will soon be in a position to make payments, ending an almost year-long deadlock that ensued when the RBI blocked the normal transaction channel for trade with the West Asian country.

According to industry insiders, the Central Bank of Iran is likely to open accounts in Indian banks to facilitate the payments.

“The government hopes to find a solution in a week from now. We have heard that the Central Bank of Iran is likely to open accounts in banks to make payments to Indian exporters,” said C. S. Bedi, chairman of the Indian Tea Association.

Bedi said one of the options was the conversion of the money put in Indian accounts by the Iranian bank into either rupee or dollar to pay the exporters.

In a directive dated December 27, 2010, the RBI had stated that transaction settlements between India and Iran had to be made outside the Asian Clearing Union (ACU) a clearing house system run by the central banks of nine nations.

Iran requires around 70-80 million kg of tea annually and is a prime market for orthodox tea. The bulk requirement is met through Sri Lanka and the rest from India.

However, the current uncertainties over payments have cast doubts in the minds of potential traders and undermined the planning of orthodox production. India might also lose ground to Sri Lanka if the dispute is not resolved soon.

“The ministry of finance and the department of economic affairs are in discussions and trying to device an institutional mechanism that will enable the settlement of oil dues with Iran and ensure payments to our exporters. The settlement process has to be put in place, which will take about a month,” commerce secretary Rahul Khullar had told reporters on the sidelines of the 128th annual general meeting of the Indian Tea Association earlier.

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