Core values
Taj Agro strategy revolves around these Pillars of Success – Excellent customer care | Transparency | Integrity | Team work | Agile approach
Taj Agro goal is to provide every customer with the same valuable service and information, on product knowledge and inventories and availability suited to their own buying needs.
Our Corporate Value:
- Honesty and Integrity
- Value our Employees & Customers
- Commitment to Excellence
- Open Communication
- Teamwork
- Corporate Citizenship
- Passion to Quality and Service
Our strategy revolves around these Pillars of Success :
- Excellent customer care :-Our brand stands for the best in the market. In line with our company’s standards, we Endeavor to satisfy our customer needs with unwavering trust and top class service.
- Transparency:-We conduct all our operations with utmost transparency, which we carry out with dignity and respect for all our supply chain partners and clients.
- Integrity:-We believe in being true to our values, not just through words but also actions. We will strive to to maintain integrity in all that we do while delivering top quality of products to our consumers.
- Team work :-We value our people, and believe that each employee is an important member of the team regardless of their title or position.
Passion to perform {Taj Agro Team}
- Agile approach as we strive to delivery the blend of right product with extensive experience in the FMCG sector, enables us to meet and exceed our customer demands.
Our Route to Market is designed to suit the BEST product that we manufacture and we are continuously taking efforts to bring about the Best Practices from across the Nutraceuticals and FMCG industry in specific . This recommends prompt action and precise market metrics to build comprehensive distribution network that covers all customers with no tolerance to quality.
Distributors/ Retailers:
We would look forward for your extended business support to host our products at your esteemed supermarkets and hypermarkets to make to to the reach of the consumers spread over local presence and other extended market chain where your group has presence – reach to the market through your esteemed retail – supermarket and hypermarket chain.
Organic farming Insight- {Taj Agro Products} India
Organic farming Insight- {Taj Agro Products} India Organic farming is the buzzword in the world of agriculture. People usually believe this is a new way of farming; but it is not. Organic farming has been practiced since ancient times. In fact, earlier, there were no synthetic fertilizers and pesticides. People were more connected to nature and used natural products. What is Organic Farming: “Organic farming is a system which avoids or largely excludes the use of synthetic inputs (such as fertilizers, pesticides, hormones, feed additives, etc.) and to the maximum extent feasible rely upon crop rotations, crop residues, animal manures, off-farm organic waste, mineral grade rock additives and biological system of nutrient mobilization and plant protection”. According to Food and Agriculture Organization (FAO): “Organic agriculture is a unique production management system which promotes and enhances agro-ecosystem health, including biodiversity, biological cycles and soil biological activity, and this is accomplished by using on-farm agronomic, biological and mechanical methods in exclusion of all synthetic off-farm inputs”. Basic Principles of Organic Farming: No use of GMOs (genetically modified organisms), highly hazardous pesticides or HHPs, and synthetic fertilizers. Practice of crop rotation to replenish soil nutrients. Recycle of all organic waste. Control of pests, diseases, and weeds through biological methods. Extensive breeding using organic food. Use alternative medicines and preventative measures. Develop and maintain biodiversity, such as planting hedges, cultivating different species, and others. Respect the environment and endeavor towards conservation of natural resources. Perform animal welfare practices, including outdoor natural grazing. Respect livestock and care for their behavioral issues, nutrition, health, housing, breeding, and overall rearing. Protect soil fertility in the long run by maintaining proper levels of organic matter, promoting soil microbial activity, and using machines carefully. Protecting soil erosion is also an important step. Make soil self-sufficient in nitrogen through recycling of organic matter like livestock manures and crop residues. Also practice biological nitrogen fixation and using legumes. Consider the impact of farming on environment in general and perform measures to conserve natural habitat and wildlife. Why organic farming is beneficial: One of the biggest benefits of organic farming is that consumers get quality produce, which is devoid of toxic residues of pesticides and fertilizers. Few Drawbacks of Organic Farming: One drawback of organic produce is that it is costlier than conventionally cultivated produce. There are reasons for the high price. First, organic farming gives lower yield than traditional farming. This leads to higher production costs, which, in turn, leads to higher selling prices. That’s why organic food is costly. Cost can be challenge for people with low purchasing power. They may miss the benefits of organic food. However, with advancement in organic farming practices, we can expect better yield and affordable pricing of organic food in the future. Steps to convert ancestral farming methods into Organic farms: If you have been doing traditional farming till now, you cannot suddenly jump to doing organic farming. The soil needs a transition period. The duration depends on the type of cultivation. Generally, it takes around 3 years for a traditional farm to convert fully into a certified organic farm. About Taj Agro : Taj Agro was started with the specific reason of direct supply and purchase from Indian farmers to begin, but yes our existing set of pharma and healthcare customers wanted to buy something in food industry like Basmati Rice, Protein powder, Egg powder and other such daily commodities, under a trusted brand name with guaranteed quality For more info write to us at E-mail I’d: info@tajagro.com Toll Free No: 1800-222-825
5 Farmers Who Prove Smart Agriculture Can Make You Rich
Farming too can be quite rewarding – both mentally and financially. Drought! Loans! Untimely rains! Low market prices! It often seems like farmers have endless suffering in their lives. Perhaps that’s one of the reasons why none of us wants our kids to become a farmer. Instead, we all want them to immerse themselves in law or medical books so they can make their careers a big success. But are these career options the only way to be successful? Definitely not. This Kisan Diwas, let’s see why even farming too can be quite rewarding – both mentally and financially. Here are five people in India who prove this to be true: 1. Pramod Gautam: Meet Pramod, a former automobile engineer who switched to farming in 2006, and now gets a yearly turnover of a crore, after implementing a radically different method of cultivation. In 2006, after feeling unsatisfied in his job as an automobile engineer, Pramod abandoned engineering and decided to give farming an earnest shot on his 26-acre ancestral land. Initially, Pramod faced his share of challenges. He planted white groundnuts and turmeric but reaped no benefits. Availability of labour was another big issue as workers preferred to migrate to cities and work in factories. Pramod decided to switch to other crops and modern farm equipment, which were not so labour intensive. An example of such types of equipment used by some Indian farmers is the driverless tractor technology – developed by Mahindra for such situations. Incidentally, farmers like Pramod can make such choices now since, unlike before, they do not have to buy all the equipment. Even with a low budget, they can rent farm equipment using apps like Trringo. In 2007-08, Pramod switched wholly to horticulture. He planted oranges, guavas, lemons, sweet limes, raw bananas and Toor Dal. Pramod also decided to start his own mill. Pramod sells the processed and unpolished pulses under the brand name of ‘Vandana’. He has an annual turnover of about Rs. 1 crore from his dal mill and an additional Rs 10-12 lakh from horticulture, which is much more than what he was earning as an engineer! 2. Sachin Kale: Like Pramod, Sachin is a mechanical engineer from Nagpur who started his career by working at a power plant and rapidly rose to the top over the years. In 2013, Sachin left his luxurious life in Gurgaon, where he was working as a manager for Punj Lloyd and getting a hefty salary of Rs 24 lakh per annum. He shifted to Medhpar to become a farmer. Talking about challenges, Sachin says: “Everything was a challenge, as I had absolutely no clue about farming. I had to learn everything from tilling the land to sowing the seeds.” Sachin invested his 15-year-old provident fund in setting up a clean energy model where his farm was useful all year round and gave a maximum of profit. In 2014, Sachin launched his own company, Innovative AgriLife Solutions Pvt. Ltd., which helped farmers with the contract farming model of farming. Today, Sachin’s company is helping 137 happy farmers working on 200 acres of land and drawing a turnover of approximately Rs 2 crore. 3. Harish Dhandev: Another engineer, Harish left his government job to take up Aloe Vera farming in Rajasthan – which proved highly successful, earning him crores. Once he decided to farm on his ancestral land in Jaisalmer, one of the first things that Harish did was to get his soil tested by the agricultural department. “The agriculture department suggested I grow crops like Bajra, Moong or Gawar – crops that require less water. They did not suggest growing Aloe Vera, in spite of the fact that we were already cultivating it, because of a lack of market opportunities for the crop in the Jaisalmer area,” says Harish. However, Harish did his own research online through resources like MyAgriGuru, which connects farmers with agri-experts across the country to allow an exchange of ideas. Harish discovered that if he set his sight further afield and used online portals to get to national and international markets, he could easily sell his produce well. Harish’s initial 80,000 saplings quickly grew in number to seven lakh. Within six months Harish managed to get ten clients for his Aloe Vera within Rajasthan itself. But soon discovered that they, in turn, were selling the extracted pulp at much higher prices. So he trained his farm labourers to extract the pulp, giving them all some extra income. Over the years, Harish has bought more land and now grows Aloe Vera over a hundred acres. His company, Dhandev Global Group, is located in Dhaisar, 45 kilometres from Jaisalmer in Rajasthan and his turnover ranges between Rs. 1.5 to 2 crore. Through the above three stories, you may believe that only educated farmers can be successful. But that is hardly the case. 4. Vishwanath Bobade: A farmer from Bahirwadi, Vishwanath’s village is in the drought-prone Beed district of Maharashtra. However, he has earned Rs 7 lakh from farming on just one acre of land! Vishwanath decided to give multi-cropping a try, and he also figured out that he could increase his crop by building a wire fence and planting creepers and climbers on them. Vishwanath also installed a pipeline with his first-year profits to ensure sprinklers watered his plants. He has also picked up farming methods like raised-bed farming and mulching over the years, which has proved to be beneficial. Indeed, Vishwanath takes help of only two labourers at his farm. He and his wife work day and night to take care of the plants and hence the cost of production is less, giving them better profits. 5. Rajiv Bittu: Rajiv is a part-time Chartered Accountant and a full-time farmer. And according to him, he earns more from farming than his chartered accountancy firm! After his three-year-old daughter refused to mingle with farmers during one of his visits to his ancestral village, Rajiv decided to take up farming to change her views. His first step was to lease some land in Kuchu village, 32 km away from Ranchi. As he did not have the funds to pay rent for the land, he offered the landlord 1/3rd of the produce he grew. And thus his journey into agriculture began. He made use of the latest technology, like drip irrigation and mulching, to get a maximum yield at his farm. “Drip irrigation is the best way to reduce water wastage and labour cost, while mulching is nothing but a thin layer of plastic in which holes are made to put the seeds. This restores the sun rays for a long time and retains humidity of the soil. It also restricts the growth of weeds around the main crop,” Rajeev tells us from his farm. Halfway into 2014, Rajeev had a good harvest of watermelon and muskmelon. But the profit did not do justice to the investment. He then divided the land into small segments and calculated the investment made, labour cost, and the profit gained from each part. This gave him a clear idea of the economics of the farm. Rajeev planted different crops in each segment to calculate the exact ‘investment versus profit’ ratio of each harvest. This helped him to decide what crops should be planted next. Rajeev has now taken 32 acres of farm on lease and is growing brinjal, cucumber, watermelon, muskmelon and tomato and earns a profit of around Rs 15 to 16 lakh every year.
India opens bulk export of edible oils {Taj Agro}
In a major policy shift, the Indian Government on Monday opened up the exports of edible oils such as groundnut oil, soyabean oil, sesame oil and maize oil in bulk quantity. So far, export of edible oils was allowed under branded consumer packs of up to 5 kg. The latest move comes on the back of an anticipated record oilseed output of 33.60 mt in 2016-17, up from 25.30 mt in the previous year and exporters feel that China could emerge as a major destination for the Indian groundnut oil. Sunflower oil – Taj Agro The Directorate General of Foreign Trade on Monday issued a notification amending the export policy for edible oils. Till now the export of edible oils such as coconut oil and rice bran oil was allowed freely in bulk, while other edible oils were allowed only under the branded consumer packs of up to 5 kg with minimum export price (MEP) of US $ 900 per tonne. Major oils exported in consumer packs are groundnut oil, sesame oil, sunflower oil and mustard oil. “The decision of allowing other edible oils such as groundnut oil, sesame oil, soyabean oil and maize oil will boost the overall edible oil export and improve the utilisation of the domestic oil millers. This is a welcome step for the industry,” said Atul Chaturvedi, president, the Solvent Extractors’ Association of India (SEA). Chaturvedi said the move will encourage bulk exports of groundnut oils to countries such as China and Europe. Additionally, India’s non-GMO soyabean will have an advantage in the international market as those nations looking for non-GMO soya bean oil will turn to India, he added. The quantum of potential export was difficult to estimate, however the trade body, believes that previously the edible oil shipments had touched a peak of 40,000-50,000 tonnes a few years ago. “This is decision will have major impact on the groundnut oil sector. This is for the first time India has opened bulk export of edible oils to the world. This will go a long way for the sector,” said Satyanarayan Agarwal, an edible oil trader. The oil trading community has been representing repeatedly to the Central government for allowing export of all edible oils in bulk. The bumper crop conditions had cascading effect on the oilseed value chain with prices of some of the oilseeds like soybean and groundnut sinking to nearly their MSP levels. Source: thehindubusinessline.com
Bees are busier, and producing more honey as pollution plummets due to lockdown
Good News for Honey Consumers {Taj Agro International} – India Despite a lean season (March-May), beekeepers swear the honey production has grown drastically. As per Vijay Kasana, a beekeeper who has farms in Himachal Pradesh, Uttar Pradesh, Kashmir and other northern states, there is 30-40 per cent increase in honey production. As the world media is flooded with photos of wild animals becoming emboldened during lockdown to stroll at heavily populated areas, insects like bees too are having the time of their life. The experts believe the drastic decrease in the air and noise pollution and pesticide-free atmosphere have kept honeybees busier resulting in an increase in honey production. As per the Khadi and Village Industries Commission (KVIC), which is under the Ministry of MSME, the number of bee colonies and the health of bees has significantly improved which is crucial for ecology and food safety. Vinai Kumar Saxena, Chairman, KVIC, said, “During the lockdown period, the quality of air improved significantly. The abundance of flora in the surrounding and a peaceful environment kept the bees busier and filled up the hives with honey in a quick time. As compared to the usual 15 to 20 kg honey collected in each bee box, the quantity rose significantly to nearly 40 kg per box during the lockdown (March-May).” He further said this trend is seen in almost all honey-producing states like Bihar, Uttar Pradesh, Rajasthan, Punjab, Uttarakhand, Himachal Pradesh, and others. As there was little pollution and almost zero use of pesticides in the crops during this period, the quality of honey also improved as bees collected pesticide-free nectar and pollen from the flowers. Despite a lean season for honey production (mid-March to May), beekeepers swear that they have extracted almost double the amount as compared to previous years. According to Vijay Kasana, a beekeeper who has farms in Himachal Pradesh, Uttar Pradesh, Kashmir and other northern states, there is 30-40 per cent increase in honey production. “As honeybees got a peaceful atmosphere to work, the outcome is a sheer delight. In a bee box, where 7-8 kg is extracted in one go, this time we have taken honey twice,” said he. Since India has different climatic zones, therefore there is a variety of honey cultivated in India. “Indian honey” ranks among the best in the world. Our mustard farm honey is exported in the European market while the saffron farm honey is among the most expensive in the world,” said Kasana. The production of honey in India stood at 1.05 lakh metric tonnes in 2017-18 (source: National Bee Board). This year, it is believed to scale up. During this period, bees’ health improved leading to a spike in their colonies. “In the last two months, without the use of medicine or extra feeding, the number of bee colonies has gone up,” he said. However, there are larger benefits of beekeeping than just the production of honey. Bees are crucial for our ecosystem and food safety. According to bee expert Dr Milind Wakode, a rise in population of honeybees means an increase in cross-pollination and the resultant higher farm yield. “In India, bees are primarily used for the harvesting of honey, but we underplay their major role in the pollination of fruits and vegetables. Countries like Israel have used this method to increase crop production and the world knows about their superior agricultural techniques,” he said. “If we maintain a clean environment, it will not only yield in productivity of bees but better quality of crops,” he added. For more details: E-mail: info@tajagro.com / tajagroproducts@gmail.com Toll Free: 1800-222-825 / 1800-222-434
Corporates should come forward to work directly with farmers
Corporates should come forward to work directly with farmers by Trade Promotion Council of India {Priyanka Singh} Priyanka Singh, Director, Taj Agro, opines that corporates should lease out their land and provide better competitive rates to farmers for their products. They should also impart training to horticulturists related to modern technology techniques being employed in horticulture. This would also improve the living standards of farmers to a great extent. BT: How have India’s horticulture exports progressed in the global market over the years? Which are the major product categories where India has been able to penetrate global markets? Priyanka Singh: India’s horticulture exports have seen phenomenal growth in last few decades due to many positive factors: Our farmers have increased the use of hybrid seeds, plants, saplings, advance sustainable harvesting techniques etc. from research institutes like PUSA; which have high yields as compared to traditional methods of farming. Farmers have now gradually started shifting from traditional farming to horticulture crops such as guavas, bananas, mangoes, dragon fruits etc. This leads to avoid price barriers and oversupply in the market; whilst still keeping demand for the traditional crops and sustainable prices to avoid losses.India’s farmers have now started using new technology for organic manure production, vermicompost, yearly crop diversification, soil testing, green house production of fruits and vegetables, consulting agri scientists via Centre for Agriculture and Rural Development (CARD), drip water irrigation, solar water pumps etc. This is constantly helping them to produce high value nutritional horticulture products as per global standards and that is why India’s products have niche presence in the international markets.Indian farmers are opting for modern methods of cold storage for high value fruits and farm produce, better transportation, standard packaging in order to meet up export standards. Further, farmers are adapting to ISO 22000 standards along with the standard set by Agricultural and Processed Food Products Export Development Authority (APEDA). According to the latest market research and GDP stats, India is becoming one of the major international destinations for quality food procurement and also becoming world’s largest producer of several high value horticulture products and crops like spices, cashew, cashew nut shell liquid, Kashmiri saffron, fruit-vegetable seeds, fresh fruits, vegetable oil, fresh vegetables, processed vegetables, processed fruits and juices, floriculture products, tea, coffee, Ayush/medicinal and herbal products, cocoa, bonsai trees of mango, lychee, Tofu Cheese (Soya) and exotic fruits. IBT: What markets are we serving presently and what potential markets can be explored for exports? What are the challenges to expanding in these markets? Priyanka Singh: India is a leading exporter of high value nutritional horticulture products to major MENA destinations like UAE, Saudi Arabia, Egypt, Iran, Iraq, Israel, Jordan, Kuwait etc. Along with it, we can explore European nations like U.K, Germany, France, Sweden, and Russian federation in future. Major challenges for expansion are as follows: India needs to form better bilateral trade with major European countries and Russian trade federation.Transportation cost may be on higher end, which may create issues for large volume exports.Better facility of inter-transit cold chain storage at shipyards and airports; more promptness at airport and cargo clearance are needed.Many exotic fruits are cultivated in India’s north east region but due to logistics and low-price margin, farmers are unable to present it globally. Inland rail connectivity may improve logistics in more farming-based zones in India.Pricing, assured payment and active banking channel needs to be formed, which is till date problem for small agro company exporters as most of companies in Europe don’t trade in Letter of Credit (LC) and bank guarantee. IBT: What are the major changes in global trade of horticulture post-COVID? Priyanka Singh: Due to Covid-19, global trade is at an all-time low and the consequent declines in trade and output is a painful consequence for all major business sectors. But restrictions on movement and social distancing, demand and supply chain disruption to slow down the spread of the disease meant that labour supply, transport, food delivery, and travel were directly affected. Whole sectors of global economies have been shut down, including horticulture trade activity. IBT: What are the opportunities for value addition, and what are the constraints exporters face in this regard? Priyanka Singh: We have immense potential in horticulture products exports which are relatively lesser known in the international markets like medicinal herbs, essential oils and other high value Ayurvedic offerings from India. There are a lot of next generation entrepreneurs coming in India in agri based segment, those who have high education and they all use modern technology and internet to promote their business, which is bringing positive feedback and better growth opportunities in the export markets. Along with this, new age entrepreneurs are educating horticulturists regarding latest market trends, modern sustainable cultivation method, online product promotion, new irrigation techniques, use of mobile based application for information forwarding etc. Taj Agro Farm India Further; more corporates should come forward in order to work directly with farmers (those are into horticulture) by leasing their land and providing better competitive rates for their products. The corporates could also impart training to horticulturists related to modern technology techniques being employed in horticulture. This would also improve the living standards of farmers to a great extent. The following constraints are felt by exporters: No one window approval solution for exporters and various licensing authorities.Presence of middle man brings additional cost disadvantage for end consumers.Less cultivation of high value products in horticulture segment despite of having age old tradition of growing medical herbs, Ayurvedic flowers, and exotic honey etc.Not enough corporate funding and direct purchase from horticulturists of India, especially mango, lychee, guava, banana etc.; which is grown seasonally mostly.Not enough buyers in horticulture products due to less awareness and advertisement.Timely transportation is big issue and due to this lots of fruits and vegetables gets wasted every year.More subsidy is required for dedicated horticulture growing farms to boost high value nutritional products. IBT: Albeit India produces more fruits & vegetables over cereals, it is the latter which are exported primarily by India? Why is that the case? How can Indian exporters be encouraged to take up horticulture exports? Priyanka Singh: India is world’s second largest exporter of rice along with cereals like wheat, sorghum, maize, millets etc. since long time as compared to fruits & vegetables, (floriculture and seeds) as our farmers are still into traditional methods of farming, where they give more preference on growing cereals due to lack of knowledge and awareness. Hybrid seeds and saplings of fruits and vegetables are more costly as compared to cereals in India.More subsidy is available for cereal growers / farmers as compared to horticulturists in India.Exports are less mainly due to high cost harvest losses in the food industryThere are higher export criteria of sampling and analysis for the presence of pesticides, heavy metals in vegetables and fruits, where Indian farmers are relatively still behind as compared to other nations.Horticulturist needs to work upon more cost-effective cultivation in India to reach more customers globally.needs to reduce various tax slabs for exporters to encourage fruit and vegetable growers; specially some subsidy is required for Air cargo as cereals are mostly shipped through Sea which is more cost effective.Indian horticulture export could be encouraged more by:-Following International packaging standardsOne window solution for various export related approvals like APEDA registration, (The Agricultural and Processed Food Products Export Development Authority), Importer -Exporter Code (IEC), Phytosanitary Certificate, Halal, The Export Inspection Council (EIC) stock approval, and organic certifications etc.Horticulturists need to work upon collaborations with MNCs directly for gaining business insights of importing countries’ certifications, rules and regulations by organizing teleconferencing, webinar, etc. for mutual business development.Agro based companies which are working closely with farmers, floriculturists, and horticulturists are required to follow SOPs for farm growers, prompt and hygienic transportation, rapid sample lab test, fully automated and organic based farms, and dedicated staff team to handle rapid rejections and complaints of importers as fruits and vegetables are perishable goods as comparatively to cereals which has higher shelf life.Horticulturists in India need more support from FMCG Companies to promote and export premium quality fruits and vegetables like Kiwis, Guava, watermelon, Mango, Banana, mushroom, Celery, Bok Choy, Asparagus, hybrid brinjal and Lettuce etc.Another thing that we must do is increase the level and efficiency of food processing in the agro industry sector. Processed foods are exported in huge quantities across countries and demand is increasing a lot these days. So, focus should be to minimize losses by increasing cold storage efficient transport system etc. and also to focus on our existing food processing infrastructure in the country. IBT: Which are the top exporters in the world and what can we learn from other countries to boost its horticultural exports? Priyanka Singh: Top exporting countries in the world are United states of India, Australia, Netherlands, Russia, Israel, Brazil, Denmark etc. Indian farmers can learn a lot from countries like Israel, Netherlands, USA etc. to boost their crop yield: Systematic management of plant nutritional value is necessary because if a horticulturist does same crop cultivation for many years, the nutrients can be replenished by dead and decaying organic matter; therefore, annual crop rotation, and using organic manure can be proven beneficial for farmers.Growing mix crop could also bring maximum yield in same land.As Indian horticulture should also opt for modern technologies like drip irrigation, water recycling, opting for drone camera for crop and pest management, creating own biofertilizers, manures, self-operated robotic machines for crop harvesting, and most important affordable electronic security sensors could be installed in farm fields for crop protection from Blue bull. Priyanka Singh is Director at Taj Agro an export-oriented food processing company based in Mumbai, manufacturing & marketing all types of egg powders, protein powder, bulk frozen and IQF fruits and vegetables. The core idea of establishment of Taj Agro has been to connect rural Indian farmers in the supply chain and reduce the exploitation of middle men in the food industry. Also, its existing set of pharma and healthcare customers wanted to procure food products like Basmati Rice, protein powder, egg powder and other such daily commodities, under a trusted brand name with guaranteed quality. The company has earned the reputation of a distinguished exporter and supplier by offering a healthy and hygienic range of agricultural products at highly affordable prices.
Iran, India and the intriguing payment crisis
To resolve the payment crisis with Iran, Indian government can explore various options before it such as legalising third party payments & importing other commodities. Iran is strategic to India’s interest as it is the leading importer of commodities like cereals, basmati rice, tea and organic chemicals produced by India.However, the halt of Iranian crude oil from Iran under the Rupee-Rial mechanism owing to sanctions imposed by the US has led to the disruption of payment to Indian exporters due to depletion of Rupees in the Central Bank of Iran.Alternatively, the mechanism to route payment through other countries has been declared by banks in India as an illegal and not a bona-fide way of receiving payments from Iran.In order to resolve this crisis, Indian government has various options before it such as legalising third party payments, importing other commodities and setting up the special purpose vehicle on the lines of INSTEX. According to Shantanu Kumar Singh, Director, Taj Agro, another thing that India can do is that India can consider importing fertilisers and some other goods, including kiwi, dates and saffron in lieu of crude oil, to keep the balance in the account. Lastly, government may consider setting up the special purpose vehicle on the lines of Instrument in Support of Trade Exchanges (INSTEX) set up by European Union to facilitate non-USD and non-SWIFT transactions with Iran to avoid US Sanctions. Iran, India and the intriguing payment crisis Spanning across centuries, the relationship that Iran has with India is a key one. Economic and commercial ties between the two South Asian nations have been buoyed by many strategic developments such as India’s interest in the Chabahar Port. At the same time, trade in commodities like Basmati Rice, tea, crude oil and fertilisers has kept their partnership going strong over the year. In fact, over the years, Iran has emerged as the largest importer of India’s tea and the third largest destination for India’s Basmati exports, while India is the second largest importer of crude oil in the world. However, of late, all’s not well between the two nations when it comes to their trade ties. The inability of Iranian importers to pay to Indian exporters for exports of commodities like Basmati rice and tea has become a thorn in their bond. This blog attempts to analyse the genesis of this crisis and looks for strategies to get past it. Top products exported by India to Iran in 2019 ProductValue exported by India in 2019 (in US$ mn)Cereals162.22Organic chemicals367.19Essential oils and resinoids; perfumery, cosmetic or toilet preparations263.75Coffee, tea, maté and spices261.13Sugars and sugar confectionery236.59Residues and waste from the food industries; prepared animal fodder197.95Miscellaneous chemical products124.53Paper and paperboard; articles of paper pulp, of paper or of paperboard116.736Man-made staple fibres106.072Plastics and articles thereof78.939Source: ITC Trade Map A brewing relationship, tanned by the American sun? The birth of the current crisis dates back to the imposition of sanctions by the US on Iran in response to the Iranian nuclear program and Iranian support for militant organizations. Consequently, India can no longer use US dollars for transactions with Iran. In order to get past this obstacle, December 2018, India and Iran agreed to revive their 2012 rupee-rial payment mechanism to receive payments in Indian rupee. Two designated banks — UCO Bank and IDBI Bank – were charged with keeping a tab on all such transactions. Typically, India would deposit rupees in these banks for importing crude oil, and this would be used to clear dues of exporters from India to Iran. However, in May 2019, India stopped importing crude oil from Iran due to the US-mandated sanctions as American waivers expired. Consequently, the accumulations in the rupee-rial accounts have been depleting drastically. As Gurnam Arora, Joint Managing Director of Kohinoor Foods Limited explains: Today the situation has come to a pass where remittances are not forthcoming from Iran because the Central Bank of Iran is not issuing currency allocations to local Iranian rice importers. Because of this large number of consignments have got stuck at Iranian ports for last several months and the funds of exporters are blocked. This has created an uncertainty because of which exporters are constrained to withhold further shipments for the time being. According to industry insiders, payments worth around INR 2,000 crore have been stalled. This has severely hurt Indian basmati and tea exporters. For example, for the time in ages, basmati rice exports from India to Iran have fallen drastically in the first half of 2020-21 fiscal owing to disruption in payments. Source: Department of Commerce, GoI. All values are in US$ mn. The same sentiment is reverberated by the tea sector, which is troubled by the double whammy of container shortage and drop in exports to Iran. Commenting on the latter issue, Indian Tea Exporters Association (ITEA) Anshuman Kanoria said: “But this volume of exports to Iran is going to be down due to some payment problems with that country. This year exports to Iran will be around 30 million to 35 million kilograms. We have apprised the commerce ministry of the problem”. When the dust settles To deal with such a situation, many Iranian buyers opted to pay through the banks based in other countries. However, this process has also invited other problems such as non-closing of shipping bills by the Banks in India even after receipt of payments. Banks have conveyed to exporters concerned that this is not a legal and bona-fide way of receiving payments from Iran. As Azhar Tambuwala, Director Marketing, at Sahyadri Farmers Producer Company Ltd, explains: In the light of the present crisis, Indian exporters started trading with Iran through other countries like Turkey, maybe it’s Middle East, Germany, etc. Paradoxically, they didn’t face any issues in exporting goods from India to Iran and got all the required clearances for the same from the concerned authorities like the customs department or the RBI. However, banks become jittery when they see shipping bills from Iran because they are afraid to take the risk of allowing or sanctioning an export to Iran. In order to deal with this crisis, there are quite a few options before India. The need of the hour is that the government, as a special case, must consider allowing exporters to receive payment from Iranian buyers through the banks based in third country. Further, as Nathi Ram Gupta, President, All India Rice Exporters’ Association (AIREA) says: IREA has been regularly raising the issue with Government of India to evolved a safe payment system with Iran which could be (a) to consider and allow third party payment mechanism (b) trade in globally traded and freely convertible currency. According to Shantanu Kumar Singh, Director, Taj Agro, another thing that India can do is that India can consider importing fertilisers and some other goods, including kiwi, dates and saffron in lieu of crude oil, to keep the balance in the account. Lastly, government may consider setting up the special purpose vehicle on the lines of Instrument in Support of Trade Exchanges (INSTEX) set up by European Union to facilitate non-USD and non-SWIFT transactions with Iran to avoid US Sanctions. Source: https://www.tpci.in/indiabusinesstrade/blogs/iran-india-and-the-intriguing-payment-crisis/ Author (Nikhaar Gogna | December 7, 2020)