© Reuters. FILE PHOTO: A labourer unloads fertilizer for drying at a manufacturing facility which makes fertiliser substances out of scrap leather-based in Kolkata February 14, 2014. REUTERS/Ahmad Masood
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By Nidhi Verma and Aftab Ahmed
NEW DELHI (Reuters) – India plans to pay in rupees for its first long-term urea import cope with Iran to hedge itself from international provide disruptions, increased costs and foreign exchange volatilities, sources acquainted with the matter mentioned, difficult now by Russia’s invasion of Ukraine.
India halted urea imports from Iran in 2019 below strain from powerful U.S. sanctions on Tehran and authorities information present that Asia’s third-largest economic system turned to nations reminiscent of China, Ukraine and Russia to fulfill its demand for the crop nutrient.
Final yr, some Indian states confronted shortages of urea after “abrupt” export restrictions by China amid excessive international costs, one of many sources mentioned.
“Now, the Russia-Ukraine situation has added to uncertainties over provides and costs … so our goal is to safe provides at cheap charges,” the supply mentioned.
India is a prime importer of urea and different soil vitamins wanted to feed its large agriculture sector, which employs about 60% of the nation’s workforce and accounts for 15% of $2.7 trillion economic system.
The federal authorities caps the retail worth of urea and displays the additional import prices as a subsidy within the federal finances. It additionally offers subsidies to native producers of urea for promoting the product at state-set low costs.
In 2020/21, India’s fertiliser subsidy invoice touched a file 1.5 trillion rupees.
Iran was India’s third-biggest supply of urea in 2018/19, supplying about 17% of New Delhi’s almost 7.5 million tonnes of urea imports.
India is taking a look at expediting a cope with Iran after indications that negotiations between Iran and the USA might culminate in a brand new settlement to elevate sanctions.
Some conferences with stakeholders had already taken place and the plan was to pay in rupees with the involvement of native banks to import yearly 1.5 million tonnes of urea from Iran, mentioned one other supply.
The pricing had but to be determined, the sources mentioned.
India’s fertiliser and finance ministries didn’t reply to Reuters emails in search of remark.
Throughout a earlier spherical of sanctions from 2012, India devised a barter-like scheme acceptable to Washington to permit it to make oil funds to OPEC-member Iran in rupees via a small state financial institution. Iran used the funds to import items from India.
That helped India slender its commerce deficit with Iran. Since India halted oil purchases from Iran in 2019, the funds within the native financial institution depleted and New Delhi’s commerce deficit with Tehran was surplus in 2019/2020.
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