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Payment crisis likely to hamper tea trade between India and Iran
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Friday, 20 May, 2011, 08 : 00 AM [IST]
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Archana Aroor
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Orthodox tea (green leaf tea) exporters in India are apprehensive of losing out on business with Iran in the coming years on account of an unresolved payment crisis. Iran is one of the major international orthodox tea buyers for India.
India’s apex bank in a directive dated December 27, 2010, 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.
Exporters feared that the tea trade between the two countries could shrink within no time in the near future as the Reserve Bank of India (RBI) has blocked the normal transaction channels through a newly updated Letter of Credit (LC) trade system for Iran.
“Until December 27, 2010, the tea trade operations were smooth, however, post that, owing to the US pressure, India pulled out of the Asian Clearing Union, a system where it could settle payments with Iran,” C S Bedi, chairman, Indian Tea Association, informed FnB News in a chat over telephone.
India exported orthodox (green leaf tea) tea to many countries like Iran, Russia and other Middle-East countries, with Iran being one of its leading trade hubs because of the huge demand there.
Tea exports to Iran rose from 3 million to 15 million over the past few years but today there were concerns for the shipment of orthodox tea to Iran due to the unresolved Iran payment crisis.
Bedi confirmed that the Association was also trying to promote quality tea of high value in a bid to keep the trade going with other major international tea buyers.
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