The Hindu Business Line : Exporters doing business with Iran feeling the heat

In the crossfire
Over the last month, the existing US ban on large Iranian banks has been extended to more banks in that country, making it difficult for payments to be routed through any US bank.
Since there was no bilateral agreement, Indians exporting to Iran are paid in US dollars and euros.

P.T. Jyothi Datta

Mumbai, Dec. 19 Exporters doing business with Iran are in a spot, as global security concerns make it more difficult for them to receive payments for their shipments.

Though clients in Iran and their designated banks are willing to transfer funds, banks in India are increasingly not accepting it, allegedly due to international sanctions, a Mumbai-based company said, raising the issue with its export-related industry association.

Intensified ban

Over the last month, the existing US ban on large Iranian banks has been extended to more banks in that country, making it difficult for payments to be routed through any US bank, an official with a public sector bank told Business Line.

Usually, dollar payments are processed through the United States Office of Foreign Assets Control. But the observation of an Iranian transaction complicates the situation, the bank official said. Similar trends are witnessed with euro payments as well, he added.

Admitting that there were issues with getting dollar- and euro-denominated payments from Iran, the banker explained, since there was no bilateral agreement between the two countries, Indians exporting to Iran are paid in US dollars and euros.

Companies exporting to Iran are now looking for a policy directive from the Government or the Reserve Bank of India, as the global environment becomes more complicated. Meanwhile, an official with a government-run export body suggests that companies could look at alternative currency, such as the Dirham.

The trade-related sanction affects exports of all hues, and products of a humanitarian nature (like medicines) were to be outside the purview, said an industry representative. But even here, there is gentle pressure and companies route their exports through Dubai, he added.

Responding to a local company with exports to Iran, a multinational bank said it had, for the time being, suspended all new businesses involving Iran.

This covered new trade transactions, exports to or imports from Iran; new financing relating to trade or investment in the country and outward and inward payments involving an Iranian bank.

Caught in the cross-fire, a local company official laments: “This has put us in a very difficult situation as we are not able to get the payments against our outstanding invoices nor able to secure further business as the customers cannot open the letter of credit nor transfer advance payments with their purchase orders.”