By Rajendra Jadhav

MUMBAI, (Reuters) – India will buy 1,000,000 tonnes of potash from Belarus as part of a bilateral agreement. This is the first such deal since sanctions halted Minsk’s ability to export the crop nutrient. Two Indian officials who were involved in discussions with Reuters said.

India suggested to the BPC that a rupee account be opened with an Indian state bank by the BPC for sales of potash. This is in response to the US and EU sanctions which have cut off India from euro and dollar trade.

BPC is Belaruskali’s export arm and the second-largest producer of potash in the world. In response to West’s intensified punitive measures against Belarus President Alexander Lukasenko the U.S. Blacklisted Belaruskali.

BPC has not responded to requests for comment.

Minsk is a major foreign currency exporter thanks to potash.

Due to the sanctions, we are unable to pay in euros or dollars. A senior Indian official was part of the negotiation with Belarus and stated that we need to import potassium.

According to another official, India could purchase 1,000,000 tonnes of potash from BPC in 2022 by paying with rupees. This was due to the sensitive nature of the issue. They both said that the deal might be closed in February.

New Delhi paid rupees to Iran in response to U.S. sanctions. Iran used the rupees as a currency to purchase rice from India.

The Ministry of Chemicals and Fertilizers of India did not respond immediately to our request for comment.

According to a spokesperson from the European Commission, India doesn’t belong to this group. Therefore, it is New Delhi who will decide whether it wishes to do business with an oppressive or illegitimate government.

The EU sanctions apply to all EU members and those countries aligned with them.

India imports almost all of its potash and Belarus has historically supplied about one-fifth to four million to five million tonnes.

Minsk might offer a discount above benchmark prices, as India had proposed to buy at least one million tonnes of potash.

Government data revealed that India had exported to Belarus $62.3 Million in the 2020/21 fiscal year while it imported $107.4 Million.

India is pushing for a deal, even though Belarus had to divert potash shipment from Lithuania’s Klaipeda port into Russian ports this week after Vilnius stopped using its railway to export the commodity.

This could have an impact on or delay potash exports from India in the coming year.

SINGLE WINNER SITUATION

Officials in the industry said that both countries would benefit from potash imports coming from Belarus.

Belarus has struggled to sell potash. India, however, has attempted to limit a rise in prices after the spike in potash price, which was more than 10 years ago. This is according to a Mumbai-based business official who spoke under anonymity to protect the delicate nature of this matter.

India subsidises potash imports in order to make them more accessible for farmers. In its Tuesday annual budget, the Indian government allocated 1.05 trillion rupees (14 billion dollars) to its fertilizer subsidy program. This is used mainly for imports of urea and potash.

According to two companies officials, about 150,000 tonnes potash shipments from Belarus were stuck due to payment problems.

These are contracts that were signed last year at lower prices. According to another official, the company has stopped shipping because they couldn’t pay.

BPC initially agreed to sell potash to India for $247 per tonne, but later reduced the price to $280. Spot market prices for the commodity are at $650 per tonne, but India, China and Brazil have annual contracts that purchase potash at much lower rates.

India’s potash imports dropped sharply in 2021 as a result of rising prices. The official from the Mumbai-based company stated that stocks must be replenished fast.

According to government data, India’s first eight months of the fiscal year 2021/22 saw a drop in potash imports by 47% compared with a year earlier. They fell from 2 million tonnes to 2,000,000 tonnes.

Canada, Russia (Belarus), Russia and Israel all supply potash to India.

Canada’s BPC faces off Nutrien (NYSE:) Ltd., Russia’s Uralkali and Israel’s ICL. Mosaic is a product of the United States.