Iran has slashed its purchases of India's basmati rice by around half over the past three months, helping push India's domestic prices nearly 10% lower in recent weeks.

In cutting its purchases, some Iranian buyers have cited stringent new Iranian standards on chemical contamination and dissatisfaction with the quality of rice being delivered, saying grades were below those specified in contracts.

India's export prices haven't fallen yet, but it is only a matter of time before they do, traders said.

"We expect to see a price impact on Indian [rice] exports within a week," said Vijay Setia, a member of the All India Rice Exporters Association.

India and Iran created what is essentially a barter system two years ago to skirt Western sanctions on Iran over its disputed nuclear program. In exchange for Iranian oil, India sells Iran a range of goods, primarily rice, soymeal and pharmaceuticals.