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New Payment Mechanism Encourages Indian Textile Exports to Iran

A new payment exchange arrangement between India and Iran regarding their bilateral trade now encourages Indian textile exporters to increase sales to Iran.

Explaining the rupee settlement mechanism, D.K. Nair, Secretary General of the Confederation of Indian Textile Industry, said India’s payment to Iran for oil imports remain in India.  Some 45 percent of the payments are deposited in a fund administered by the UCO Bank.

Iranian importers of textiles and clothing get letters of credit chargeable against the cash in the UCO Bank account after securing clearances from their government.

Indian exporters, after the consummation of a deal with Iran, may obtain payment in rupees from the same account.  The account, reportedly, is substantial and other exporters have used it successfully.

A delegation from India’s Union Ministry of Textiles met in Iran with importers of textiles and prospective importers earlier this year and produced a trade show in an effort to stimulate more textile exports.

During the meeting and trade show almost sixty Indian textile and clothing exporters solicited Iranian business and an estimated $22.5 million worth of exports is estimated to follow from those efforts.

Even more Iranian imports of Indian textiles is anticipated for the future.

“The impact of deeper engagement with Iran can translate into more than $100 million Indian textile exports to Iran,” predicted an official of India’s Union Ministry of Textiles.

In 2012, India’s textile and garment imports to Iran totaled $108 million, while total Indian exports to Iran in all categories hit about $3.3 billion.

For the same period, Iranian exports to India were valued at $11.5 billion.

For India, Iran is shaping up as a major market.

“It looks like Iran will be a big market for exporters of acrylic yarn and fiber, synthetic and manmade fibers and jute, said Anil Rajvanshi, Vice-Chairman, Synthetic and Rayon Textiles Export Promotion Council of India.