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, reported The Hindu newspaper.
The Commission meeting was led by India’s External Affairs Minister Sushma Swaraj and Iran’s Finance Minister Ali Tayyebnia.
India decided to allow the Pasargad Bank and Parsian Bank of Iran to set up branches in New Delhi and Mumbai, added The Hindu.
“A major beneficiary of normalization 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 Pasargad and Parsian conduct their transactions through the UCO bank of India,” reported the daily.
After the US and western powers in 2011 blocked payment channels toward 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.
The Hindu further added that 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, the daily added.
Sources have 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.