By Rajendra Jadhav

MUMBAI (Reuters), India is planning to purchase 1 million tonnes from Belarus, in the first bilateral deal of its kind since Minsk was unable to sell the crop nutrient due to sanctions. According to two Indian officials that were part of the talks with Reuters.

India suggests that BPC, the state-run Belarus Potash Company (BPC), could establish a rupee account at a bank run by India for the purpose of selling potash. The suggestion comes as a result of sanctions from the United States and European Union which cut off Minsk’s access to dollar and euro trade.

BPC is Belaruskali’s export arm and the second-largest producer of potash in the world. As the West intensified its punitive actions against Belarus President Alexander Lukasenko, the U.S. added BPC on their sanctions list and blacklisted Belaruskali.

BPC didn’t respond to our request for comment.

Minsk is a major foreign currency exporter thanks to potash.

We aren’t able to pay dollars or euros due to sanctions. A senior Indian official was part of the negotiation with Belarus and stated that we need to import potassium.

A second official said that India could buy 1,000,000 tonnes potash from BPC through rupees in 2022. The other official declined to name the reason for the sensitive subject. They both said that the deal might be closed in February.

New Delhi made rupee payments towards Iran after U.S. sanctions were imposed on Tehran. Tehran used rupees for rice purchases and other Indian goods.

A request to comment was not answered by the Indian government immediately.

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 against benchmark prices, as India had proposed to buy at least one million tonnes of potash.

According to government data, India exported $62.3 million to Belarus in 2020/21, but its imports were $107.4million.

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.

The impact of this on India’s potash exports is not clear.

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

Belarus is having difficulty selling potash while India is trying to control a price increase after the spike in potash prices over the past decade. A Mumbai-based official spoke on condition of anonymity due to the sensitive nature of the issue.

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

Two company representatives said that payment problems have caused delays in the delivery of about 150,000 tonnes worth of potash from Belarus.

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

BPC had initially offered to provide potash to India at $247/tonne early in 2021. However, it later increased the price to $280. Although the spot price is $650 per ton, India, China, Brazil, and other large buyers typically purchase annual contracts at lower prices.

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 and Israel are the key potash suppliers to India.

Canada’s BPC faces off Nutrien (NYSE) Ltd. Russia’s Uralkali. Israel’s ICL. Mosaic.