Advantage India: Iran accords priority status to Delhi for trade

It’s payback time for Tehran for New Delhi’s solidarity. Signaling an upsurge in its ties with New Delhi, Iran has accorded priority status to India for trade, according to India’s apex export body. Acknowledging India’s support to Iran during difficult times, when the US and the 28-nation EU bloc had imposed sanctions on it, India was among the three countries that continued to engage with Iran in trade. The other two countries were China and Turkey.

Iran wants to collaborate with these three countries in seven sectors including mining, petrochemicals and food. In 2014-15, India’s exports to Iran stood at USD 4.17 billion while the imports amounted to USD 8.95 billion, an increase from USD 1.44 billion and USD 7.61 billion, respectively, during 2006-07. After the sanctions were imposed on Iran in 2006-07, India continued exporting commodities like rice, sugar and soybean, along with textiles, and also imported crude oil from Iran in large quantities. Eventually, India did cut down on imports of crude oil from Iran due to payment difficulties imposed by the US and Western countries during the sanctions regime.

A delegation of the Federation of Indian Export Organisations (FIEO) visited Iran recently. “Iran wants to reinforce its relationship with countries which stood by it during its difficult times. Hence, it is reciprocating by giving preference to them,” said Ajay Sahai, director general of FIEO.

Due to the sanctions imposed on Iran, India could not make payments to Iran for oil imports. India had issued guidelines in early 2015 to allow third country exports of humanitarian goods such as food, medicines and medical equipment to Iran as part of oil payments due to Iran. Iran is looking to cooperate with India in agro processing, information technology, steel, hotels, tourism.

India is also investing around Rs 200,000 crore at the Chabahar port in Iran in an array of infrastructure projects. The Chabahar port would give India access to Afghanistan and is strategically important. The port would give India sea-to-land access to Afghanistan and also act as a gateway to Central Asia for India to secure its interests. India has been looking to increase its engagement with Iran and after the successful completion of the nuclear deal negotiations between Iran and P5+1 countries, India is looking to step up engagement with Iran across the spectrum. Once the sanctions are lifted on Iran around early 2016, it would pave the way for a more concrete engagement between the two countries.

The decision by Iran to accord the priority status to India would further strengthen India’s intent to secure opportunities for its businesses and strategic interests in Central Asia.

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