Rupee Trade Mechanism Supports India’s Textile Exports to Iran

A rupee-based payment settlement mechanism between India and Iran is facilitating textile exports by simplifying financial transactions. The arrangement allows exporters to receive payments within India, reducing delays and improving trade efficiency.

A new payment settlement mechanism between India and Iran is contributing to increased activity in India’s textile export sector. The rupee-based trade system allows transactions to be completed more efficiently by reducing financial and operational barriers for exporters.

Under this arrangement, payments made by India for Iranian oil imports are retained within the country. Approximately 45 percent of these funds are maintained in accounts managed by UCO Bank. Iranian importers can utilise these funds to issue letters of credit for purchasing Indian textiles and garments, subject to approvals from the relevant authorities.

The mechanism enables Indian exporters to receive payments directly in rupees from the same accounts, supporting faster and more secure transactions. Industry participants indicate that the system is already contributing to increased export activity.

According to the Confederation of Indian Textile Industry, the framework is encouraging exporters to expand their presence in the Iranian market. A delegation from India’s Ministry of Textiles recently visited Iran and organised a trade show aimed at strengthening business engagement.

The event saw participation from around 60 Indian textile and apparel exporters and generated export opportunities estimated at $22.5 million. Officials expect continued engagement to support further growth in trade volumes.

Industry representatives project that stronger trade relations could increase India’s textile exports to Iran beyond $100 million. Key product categories include synthetic and manmade fibres, acrylic yarn, and jute products.

In 2012, India’s textile and garment exports to Iran were valued at $108 million, while total exports across all sectors reached $3.3 billion. With the introduction of a structured payment mechanism, Iran is emerging as a potential market for Indian textile exports.