Iranian Delegation to Bolster Economic Relations With India

EghtesadOnline: Iran's Foreign Minister Mohammed Javad Zarif is expected to arrive in India after leaving Tehran on Monday afternoon, IRNA reported.

News ID: ۷۴۶۴۳۹

08 January 2019

The top Iranian diplomat, who will be in India for the annual Raisina Dialogue organized by think-tank Observer Research Foundation, will meet India's External Affairs Minister Sushma Swaraj on Tuesday.

Zarif is also expected to call on Indian Prime Minister Narendra Modi during his two-day visit, Indian news outlet The Print reported.

Both sides are expected to follow up on issues discussed during Zarif’s last trip to India in May 2018, when the two countries vowed to boost bilateral trade and support Iran's nuclear deal, also known as the Joint Comprehensive Plan of Action, after the United States' withdrawal from the deal and imposition of sanctions, according to Financial Tribune.

Talmiz Ahmad, a former Indian envoy to Saudi Arabia, Oman and the UAE, said ties between India and Iran have been growing since the 1990s.

"This visit has to be seen from the strategic angle. It will provide a platform to the Iranian foreign minister to highlight the significance of the relationship between both countries while the US continues to remain dysfunctional and continues to give out mixed responses on Iran.”

Iran became India’s third largest oil supplier during April-June 2018 by overtaking Saudi Arabia. Total imports from Iran to India stood at $11 billion in April-November 2018, out of which 90% of the shipments comprised crude oil.

On Monday, the Indian Finance Ministry exempted rupee payments made for the purchase of Iranian oil from a staggering withholding tax. The announcement comes close on the heels of Iran announcing investments to the tune of Rs 15 billion (more than $200 million) to expand a refinery operated by Chennai Petroleum Corp., which is planning to increase oil production to 9 million tons per year from about 1 million tons at present, according to CPC's Managing Director S.N. Pandey.

Accompanying Business Delegation

Accompanied by a high-powered business delegation, Zarif will also address a business forum under the aegis of the Confederation of Indian Industry on Tuesday.

The main objective of this event will be to discuss the mechanism for continuing business transactions in Indian currency and other modalities in the wake of sanctions reimposed by the US, while providing a platform for Iranian businesses to explore investment opportunities in India.

The business delegation accompanying Zarif will be led by President of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei. The chamber of commerce represents Iran's private sector businesses.

As reported by the chamber's website, the ICCIMA delegation seeks to survey hurdles in the way of Iran-India trade, especially those associated with banking and two-way transactions, expand cooperation in transportation and customs affairs, and negotiate a preferential trade agreement with the Indian side.

The business delegation includes representatives of domestic producers of pharmaceuticals, medical equipment, pesticides, auto parts, electronic devices, petrochemical and chemical products, and textile.

Expansion of Cooperation on Chabahar Project

Talks to expand Iran-India cooperation on the Chabahar Port project is also expected to be discussed during the visit.

The project was recently exempted from US sanctions due to Indian investments there and its strategic importance to Afghanistan, which is landlocked. The exemption also includes development of Chabahar Port, along with a railroad project and Iranian petroleum shipments to Afghanistan.

During the visit of Iranian President Hassan Rouhani in February last year, the Indian premier assured him that India will support the development of Chabahar-Zahedan Railroad in order to fully utilize the port. However, the project has not seen much progress since then.

With the opening of the Indian Ports Global Ltd. office in Chabahar last month, Iran officially leased the operational control of Shahid Beheshti Port to India.

The Indian company is a joint venture between the largest container port in India, Jawaharlal Nehru Port Trust, and Kandla Port Trust, a seaport in the western Gujarat state, for the development of ports overseas.

"The Indian company’s operational control would last for an interim period of 1.5 years, which may be followed by an additional 10-year period," Mohammad Ali Hassanzadeh, the deputy head of Ports and Maritime Organization of Iran, said.

Loading and unloading as well as supply of equipment and marketing will be part of the IPGL mission in Chabahar, IRNA quoted the official as saying.

The first phase of the strategic Iranian port developed in cooperation with India was inaugurated by Iran’s President Hassan Rouhani on Dec. 3. Chabahar is Iran’s only oceanic port town and consists of two separate ports: Shahid Kalantari and Shahid Beheshti.

The opening of the first phase of Shahid Beheshti Port (out of five phases defined for the project), which has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country), will allow the docking of super-large container ships (100,000-                                                                  120,000 DWT) and increase India’s connectivity with Afghanistan.

The inauguration of IPGL office was timed to coincide with a trilateral meeting of officials from India, Afghanistan and Iran in Chabahar during which they agreed on routes linking their trade and transit corridors.

India, Iran and Afghanistan signed a pact in May 2016, which entailed the establishment of transit and transport corridors among the three countries using Chabahar Port as one of the regional hubs for sea transportation in Iran, besides multimodal transport of goods and passengers.

Under an agreement, India is to equip and operate two berths in Chabahar Port Phase-I with a capital investment of $85 million and annual revenue expenditure of around $23 million.

9% Decline in Non-Oil Trade

Latest data released by the Islamic Republic of Iran Customs Administration show Iran traded 7.86 million tons of non-oil commodities worth $3.32 billion with India during the first nine months of the current fiscal year (March 21-Dec. 21), registering a 6.04% and 9.57% decline in tonnage and value respectively compared with last year's corresponding period.

Iran’s exports to India stood at 6.57 million tons worth $1.6 billion, down 5.43% and 16.83% in tonnage and value respectively year-on-year. India was Iran’s sixth major export destination during the period.

Iran mainly exported urea, methanol, ammonia, liquefied propane and bitumen to India during the nine-month period.

India exported 1.28 million tons of goods worth $1.71 billion to Iran, down 9.01% and 1.53% in tonnage and value respectively YOY. India was the seventh major exporter of goods to Iran over the nine months.

The imports mainly included semi-milled rice, wholly-milled rice, tea, graphic electrodes used in furnaces and paperboard.