Indian investment in Iran, including billions of dollars in connectivity, infrastructure and oil projects topped the agenda as Iranian President Hassan Rouhani arrived for a three-day visit to India on Thursday.
“The two countries are on the same positive, right track,” Mr. Rouhani said, just before leaving for Hyderabad.
He told reporters that the Chabahar investment project is a “key objective” for Iran while several MoUs would be signed after his meeting with Prime Minister Narendra Modi.
Threat of sanctions
The visit, which comes close on the heels of a decision by the Modi government to allow Indians to invest in Iran in rupees signals an independent line from the United States, which is threatening new sanctions against Iran in the coming months.
“Last month we allowed investments in rupees to be made in Iran for the first time. With the exception of Bhutan and Nepal, at present all foreign investments have to be made in dollars, so this is a step to stimulate our interest in Iran,” said a government source, who didn’t wish to be identified.
The rupee investment plan is expected to ease the path for businessmen wishing to circumvent challenges posed by the current sanctions regime against Iran.
Banking hassles
Although many of the sanctions were officially lifted after the Joint Comprehensive Plan of Action on nuclear scrutiny was signed in 2015, the U.S.’s stern posture on Iran has meant that few international banking and insurance companies are willing to assist investments there. “The absence of banking and payment channels have been a challenge for Indian businessmen, and we have been making special efforts to address those challenges. We have been in discussions on new investment routes, a double tax avoidance agreement, preferential trade agreements, and a rupee-rial mechanism,” the source added.
Officials also said the government was committed to “speeding up” work at the Chabahar Shahid Beheshti Project, denying reports that there had been any “slowdown” due to pressure from the U.S.
Mr. Rouhani will arrive in New Delhi on Friday ahead of official meetings on Saturday.
