Iran to buy sugar from India after 5 years
Iran has found a way to spend the money it has accumulated in the South Asian nation’s banks from trading oil. Iran is likely to buy sugar from India for the first time in five years in order to secure its food supply due to its block in the global financial system, including using US dollars from its oil sales to transact with other countries.
After sanctions from the United States, Iran has struck deal with India to purchase 150,000 tonnes of raw sugar from Indian sugar mills from March and April 2019. Iran will pay Indian rupees held in escrow accounts at UCO Bank from oil sales to India.
Meanwhile, India’s sugar stock reserve has been consistently increasing due to a record crop in two consecutive years and exceeding local sugar production. The deal between both countries can help ease the financial woes and enhance trade tie-ups.
India to regain its sweet spot
This move will help India once again regain its sweet spot as the primary sugar manufacturer globally, a spot Brazil has held as the largest sugar manufacturer and exporter.
India imports about 80% of Iran’s crude oil worth $ 12.8 billion and in return exported commodities like Basmati rice, tea and oilseed meal worth $ 2.9 billion only according to India’s Directorate General of Commercial Intelligence and Statistics. Sugar trade will help with tackling the swell in rising inventories. India is further looking at potential sales of other commodities as well.
The revival of state-owned UCO Bank
“This will further revive the Indian state-owned UCO bank which is burdened with rising bad loans. Iran’s sugar purchase with oil money will help increase its net interest outcomes as well as operating profits.” elucidates UCO Bank’s Chief Executive Officer Atul Kumar Goel.
