Ahead of Hillary”s visit, India bans urea imports from Iran?

Rajeev Sharma?

In a major move, four days ahead of United States’ Secretary of State Hillary Clinton’s India visit (May 6-9, 2012), India announced a ban on urea imports from Iran.

Though officially India has rejected international pressures on stopping oil imports from Iran and has refused to tow the American do’s and don’ts on Iran, sources said India is quietly and gradually scaling down all imports from Iran. This is despite India’s huge strategic dependence on Iran for accessing Afghanistan where India has already invested $ 3.2 billion and scores of reconstruction projects in diverse fields by India in Afghanistan are underway.

The Ministry of Chemicals and Fertilisers has recently announced that since the government of Iran has put restrictions on export of urea from Iran till June 2012 and since urea is urgently needed in India for the ensuing ‘kharif’ season, it has been decided to float another tender through  State Trading Corporation (STC) with a rider that supply from Iran should not be accepted since the suppliers again may back out due to export restrictions in Iran.

The Department of Fertilizers buys roughly 6 million metric tonnes of urea on government account by importing through the canalising agencies i.e. Indian Potash Ltd. (IPL), Metals and Minerals Trading Corporation (MMTC) and STC. For the year 2012-13, a tender was floated through IPL in early March 2012 and bids of three suppliers which were the lowest were finalised. These suppliers were to supply urea from Iran. The STC tender is yet to be opened.

In the meantime, the Indian ambassador in Tehran, Dinkar Shrivastava, has been directed by the UPA government to take up the matter with the Iranian government regarding problems being encountered by IPL suppliers in sourcing urea from Iran under the first tender. Dinkar Shrivastava, after holding meetings with various authorities and companies in Iran, has informed that although there is an export ban from Iran but export permits are being given on case to case basis by the government of Iran. In view of this, the UPA government has informed STC to modify the terms of the tender by removing restriction on Iranian urea.

Iran constitutes about 35 per cent of urea imports. The Iranian logjam has already pushed the price of urea imports to around $ 500 more per tonne.?