India, Iran again fail to strike wheat export deal - sources

A worker displays rotten wheat grains at a godown on the outskirts of Amritsar in Punjab June 28, 2012.

NEW DELHI (Reuters) - A delegation of Indian government officials to sanctions-hit Iran could not strike a deal to export wheat to the Islamic Republic which now needs to inform New Delhi about its willingness to buy the grain, sources said on Wednesday.

India and Iran have been in talks for almost a year to clinch a deal on wheat and quantities of 2-3 million tonnes are under discussion, but quality issues have hampered negotiations.

A deal would help ease a trade imbalance between New Delhi and one of its biggest oil suppliers as they seek ways to pay for the crude in the face of western sanctions aimed at curbing Tehran's nuclear programme.

Farm Minister Sharad Pawar said on Tuesday that India can supply Iran with high quality wheat if Tehran decides to finalise purchasing.

The Indian government sent a delegation to Iran, which returned last night, to clinch a deal to help partly meet payments for Iranian oil and fix an imbalance in trade in favour of Tehran.

"There were extensive discussions but there was no final deal. Now the ball is in Iran's court and they need to inform us when they make their mind up. We can sell 2-3 million tonnes to them," one of the sources said.

Iran has not bought Indian wheat since the mid-1990s because of concerns about Karnal bunt, a fungal disease. An Iranian delegation came to India in June to inspect warehouses and laboratories. They also took wheat samples to Tehran.

(Reporting by Mayank Bhardwaj; editing by Jo Winterbottom)