Iran’s leading banks will soon open branches in India to energise commercial ties between New Delhi and Tehran.
The decision was amongst a slew of commercial measures taken by the India-Iran Joint Commission that met for the first time since Iran and the P-5+1 grouping struck a deal to end sanctions on Iran. After the meeting led by External Affairs Minister Sushma Swaraj and Iranian Finance Minister Ali Tayebnia India decided to allow the Pasargan Bank and Parsian Bank of Iran to set up branches in New Delhi and Mumbai.
“A major beneficiary of normalisation of banking channels between two sides will be India which has just begun settling more than $6.5 billion energy-related pending payment, with Iran. Currently both Pasargan and Parsian conduct their transactions through the UCO bank of India,” said K.L. Malhotra, convenor of the Indo-Iran Economic Cooperation Council which was launched by Dr. Tayebnia during his visit. After the U.S. and western powers in 2011 blocked payment channels to increase pressure on Iran, the Reserve Bank of India created a channel for payment via Turkey.
The two countries also discussed measures to boost logistic services, including allowing freight forwarding companies (numbering around 5,500 in India) to take advantage of the rupee payment mechanism and the insurance cover that are currently available only to exporters and importers.
As freight forwarders are neither part of the rupee payment mechanism nor are given the insurance cover on Iran-related transactions, they are now forced to route cargo meant for Iran through Dubai and China and Russia, Samir Shah, Chairman, Federation of Freight Forwarders’ Associations in India, told The Hindu .
India and Iran have decided to hold preliminary discussions for a preferential trade agreement (PTA). The PTA is meant to ensure that both the countries will cut or eliminate duties on certain mutually agreed products to increase bilateral trade. A Joint Working Group will hold meetings to look at the feasibility of the PTA.
Sources also said Iran has sought investments from India in several sectors including engineering, agro-processing, petrochemicals, tea, pharmaceuticals and irrigation, besides infrastructure building— power and railways.
In the past few months Iran has shown a special interest in exporting its crude to Indian refineries that are equipped to handle Iranian crude that has a high sulphur content.
Officials told The Hindu that the next big bump to India-Iran trade will come from the signing of the contract to develop the Chabahar port, which is in its “final stages of negotiation”.
