0820 GMT May 19, 2019
Deputy Agriculture Minister Ali Akbar Mehrfard announced the end of the annual ban in a letter dated November 28, the ISNA reported.
The government usually imposes the ban for a few months each year to support local prices and help Iranian growers during the harvest season.
Iran consumes three million tons of rice a year. About one million tons is imported, mainly from India and Pakistan.
On November 11, Business Standard reported that India's payment system with Iran is being relaxed further for basmati rice exports. This comes after the US allowed India to continue importing crude oil from Iran and develop Chabahar port.
Now, India is finalizing guidelines for exporting basmati rice to its largest importer — Iran — on a rupee payment basis.
The move has come as a positive development for exporters who are paying a higher price for procuring basmati.
Last year, India exported basmati rice valued at $4.17 billion with Iran as the largest buyer with $905 million.
In the first five months of 2018, exports have already crossed $2 billion and Iran continues to be the largest buyer for India followed by Saudi Arabia.
When the US announced sanctions against Iran, Indian farmers had already increased area under basmati cultivation but exporters were apprehensive. However, the recent exemption for Iran followed by easing of the payment crisis has lifted the spirits of basmati exporters.
"Higher paddy price this season has put some pressure on the retail price, especially if you consider that there is recession in the global market. However, some stability has been restored now and we expect a good basmati export cycle this year," Kohinoor Foods Joint Managing Director Gurnam Arora, said.
He added that the 'Iran issue' had also been resolved to a large extent and traders have been allowed to barter deals and consignments valued in rupee terms.
"The guidelines are being formulated and we are confident that Iranian basmati imports would start soon."
India is also bullish about the prospects of the Chinese market, although it basically imports non-basmati rice varieties now. Recently, a buyer-seller meet was organized in China with the participation of five to six Indian rice exporters even as the country approved 24 domestic rice millers.
However, the Chinese basmati market would still take some years before it 'matures' for domestic exporters, Arora said.
China is the world's largest producer and importer of rice and procures about five million tons every year. India has estimated a potential sale of one million tons of rice to China. The country planned to boost rice and sugar exports to narrow the trade gap with China.
Recently, five new Indian rice mills were cleared for exporting non-basmati rice to China, taking the total to 24 rice mills. In May 2018, Chinese officials had inspected rice mills capable of exporting non-basmati rice.
Basmati exporters have also been exploring other markets including those in the US, European Union and Latin America.
Last year, total basmati exports from India stood at little over four million tons with almost 80 percent of the consignment going to West Asian countries, led by Iran. However, exporters are still unsure if last year's export figures would be matched.