Iran buys Indian sugar to ease its oil-money headache
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
tons 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 percent of its crude, to comply with the condition that forbids
direct fund transfers to Iran for a U.S. 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, oil seed meal and tea -- were worth
only $2.9 billion, according to India’s Directorate General of Commercial
Intelligence and Statistics.