The sugar industry has written to the food ministry seeking a solution to the problem of exports of sugar to Iran, which has not happened this season, a senior industry official said.

The industry has asked the government if it can export sugar to Iran and get payment in dirham or euro, a third country currency, because Iran does not have Indian currency with them, the official told Informist. "We have made a representation to the commerce ministry also," the official said.

Following US sanctions on Iran's energy sector, India stopped importing oil from the latter, resulting in a reduction in its rupee balance which Iran has with UCO Bank and IDBI Bank.

"This has adversely affected exports of Indian sugar and exporters are facing difficulty with payments for consignments to Iran," an industry body said in a letter, reviewed by Informist.

In 2019-20 (Oct-Sep), India is likely to have exported 1.0-1.2 mln tn sugar to Iran.

To extend liquidity to sugar mills and help them clear cane dues, the government is providing an assistance of 6 rupees per kg to export 6 mln tn sugar in 2020-21. 

The subsidy of 6 rupees per kg covers handling and processing costs besides transport and freight charges on sugar limited to Maximum Admissible Export Quantity.

So far, Indian traders have signed contracts to export over 2 mln tn of sugar, of which, only 200,000 tn has been shipped.

Export deals have slowed down over the last two weeks because of weak demand from the overseas market following a rise in global prices and due to container shortage for white sugar.

Without government support, it is tough for Indian sugar industry to penetrate global markets due to the gap between domestic and international prices.