NEW DELHI— India is taking steps to boost exports to Iran as New Delhi tries to fix a trade imbalance with the sanctions-hit country. India has slashed its oil imports from Tehran, but remains Iran’s second-largest customer for crude.
India’s government is now allowing traders to sell imports from third countries to Tehran if they can add at least 15 percent value to the products. India has been searching for ways to increase exports to Iran.
In a bid to overcome problems posed by Western sanctions on Iran, India has been partly paying Tehran for oil in rupees, the Indian currency. But because of sanctions-related banking issues, the rupees have been piling up in an Indian bank. Some of those rupees are used by Tehran to pay for things it buys from India that are not prohibited by the sanctions. But the Indian exports add up to far less than imports from Iran.
The head of the Federation of Indian Export Organizations, Rafeeque Ahmed, hopes the latest measures to liberalize trade with Iran will result in sizeable growth in exports this year. India’s exports amounted to less than $3 billion last year, while its oil imports totaled about $11 billion.
India presently exports mostly agricultural products such as rice. Ahmed says it now hopes to diversify into new areas such as textiles, machinery and consumer goods.
“We feel that certain chemicals, automobile parts, some light engineering items, and home needs, these are the items which can go," he said. "With this facility they can set up projects, like there is a big demand for cement factories, and many other industries they want us to set up in Iran. And there are companies in India which are capable of it, but they had to import certain parts from outside. That can be done now. ”
Besides enhancing trade ties, India has also announced plans to invest $100 million to upgrade Iran’s port of Chabahar, on the Gulf of Oman.
During a visit to Iran earlier this month, India’s shipping secretary said that the port will provide a safe and economical transit route to Central Asia through planned rail and road links. New Delhi has defended its decision to invest in the Iranian port, saying that it will give India easier access to Afghanistan, where it is involved in many reconstruction and infrastructure projects.
Many experts say India’s decision to help upgrade the Iranian port is meant to counter China, which has helped develop the Gwadar port in Pakistan, about 70 kilometers away from Chabahar port. Both ports are considered strategically significant for trading routes.
While India has slashed oil imports from Iran under pressure from the United States, it maintains friendly relations with Tehran.