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Iran still balks at buying Indian wheat with fungus.

Almost-finalized plans for exporting Indian wheat to Iran are going nowhere, Indian officials say, as Iran continues to worry about a fungus often found in Indian wheat.

Under India's oil payment agreement with Iran, 45 percent of the bill has been paid in rupees. The other 55 percent was paid in euros through a Turkish bank. But that ended February 6 when new US sanctions took effect. Now, the entire Iranian oil import bill is expected to be paid in rupees.

At present, Iran holds $5 billion in rupees in the account in India, and can only spend it to buy Indian goods. In 2012, India spent $15.94 billion to buy Iranian oil, but Indian exports to Iran accounted for just $2.40 billion. India assumed Iran would be desperate to buy Indian wheat.

The wheat sale was agreed to during Prime Minister Manmohan Singh's visit to Iran last year, but both sides are yet to sort out the quality issues so they can enter into a long-term arrangement for wheat.

The quality concern is a fungal disease, known as "Karnal bunt," in Indian wheat. Iran stopped buying wheat from India in 1996 alleging high levels of Karnal bunt in grain.

India has subsequently argued that its wheat has internationally permissible levels of Karnal bunt and that Iran was using a similar yardstick of quality for wheat from the United States.

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Title Annotation:Economy: Money and its impact
Publication:Iran Times International (Washington, DC)
Geographic Code:7IRAN
Date:Feb 22, 2013
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