According to sources, India is considering the option of initiating barter trade involving commodities such as fertilizers and gas with Egypt. This proposal is part of a broader agreement that could involve New Delhi providing Cairo with a credit line amounting to several billion dollars, as reported by Reuters.

As per a source familiar with the matter, an agreement is expected to be unveiled later this month during Indian Prime Minister Narendra Modi's inaugural visit to Egypt. The North African nation, grappling with an extended shortage of foreign currency, is anticipated to benefit from the agreement.

“The agreement would allow Egypt to make purchases in rupees and bartering is being considered as a means to settle this debt through the sale of Egyptian products that might be of use for India,” the source said.

An Indian official stated that India's foreign ministry is engaging in consultations with various departments to gauge their interest in obtaining fertilizers and gas from Cairo as partial payment for the credit line being extended.

New Delhi has expressed a strong interest in diversifying its fertiliser imports, particularly following the challenges faced in 2021 due to Chinese export restrictions and a significant surge in prices, according to an Indian official.

In the proposed arrangement, Egypt has shown interest in receiving wheat supplies and other commodities. However, the Indian official noted that New Delhi is unlikely to ship wheat due to its existing ban on wheat exports.

Earlier, in May 2022, India, the world's second-largest wheat producer, imposed a ban on wheat exports to address the issue of surging domestic prices. This decision led to the cancellation of India's plan to export 3 million tons of wheat to Egypt for the 2022/23 year. Consequently, Egypt has since turned to Russia as its primary source for the grain.

“It’s a negotiation. Which companies will be involved and in which commodities? All of that is still in discussion,” Egypt’s supply minister Ali Moselhy told Reuters.

“There are a lot of discussions but up until now the model is not defined,” said Moselhy, who did not specify the size of a possible credit line.

According to unnamed sources from India and Egypt, who requested anonymity due to the lack of authorization to speak to the press, various government bodies including India's external affairs ministry, finance ministry, and trade minister, as well as Egypt's foreign ministry and trade ministry, have not responded to requests for comment.

In the previous fiscal year, India exported goods worth $4.11 billion to Egypt, while importing goods valued at $1.95 billion.

As reported by Reuters last month, Egypt has faced challenges in making timely payments for its substantial wheat purchases, with some payments being deferred by several months due to a shortage of funds.

Amid the economic impact of the pandemic and soaring commodity prices, Egypt is striving to stabilize its economy, which has led to approximately $20 billion being withdrawn from its financial markets by foreign investors.

Image source: Thomson Reuters