India weighs barter trade with crisis-hit Egypt

India is weighing a proposal to begin barter trade in goods like fertiliser and gas with Egypt as part of a wider deal that could see New Delhi extending a credit line worth several billion dollars to Cairo, sources told Reuters.

An agreement is likely to be announced later this month during Indian Prime Minister Narendra Modi’s first visit to Egypt, which faces a prolonged foreign currency shortage, a source with knowledge of the matter said.

“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.

India’s foreign ministry is consulting with departments on their appetite for fertiliser and gas from Cairo as part payment for the credit line, an Indian official said.

New Delhi is keen to diversify its fertiliser imports, especially after 2021, when some Indian states faced shortages due to Chinese export restrictions and a record price surge.

As part of the facility, Egypt is keen to take wheat supplies, among other items, but New Delhi is unlikely to ship the grain due to its wheat export ban, the Indian official added.

India, the world’s second-largest wheat producer, banned wheat exports in May 2022 to help control rising domestic prices, rescinding a plan to export 3 million tons of wheat to Egypt in the year 2022/23. Egypt now depends mostly on Russia 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.

The other sources from India and Egypt did not wish to be identified as they are not authorised to speak to the press.

India’s external affairs ministry, finance ministry, trade minister, and Egypt’s foreign ministry and trade ministry did not immediately respond to requests for comment.

India exported $4.11 billion of goods to Egypt in the last fiscal year, while importing $1.95 billion.

Egypt has deferred payments for its large wheat purchases, in some cases by months, due to shortage of funds, Reuters reported last month.

Egypt is trying to stabilize an economy hit by the pandemic and high commodity prices, prompting foreign investors to pull about $20 billion out of its financial markets.