India has evinced interest in signing a preferential trade agreement with Iran once international sanctions on the Persian Gulf nation are lifted.
This will be India’s first trade agreement with a country in West Asia and offer it a foothold to tap other markets in the region, reports the Economic Times.
‘We have a good relationship with Iran. It is a good market for us in the long term,’ a senior commerce department official told ET on condition of anonymity. ‘So, a preferential trade pact makes sense and we are interested. We are still at a conceptual stage on this.’
The official said by conceptual stage he means that both the parties have shown interest in signing the agreement but no negotiations have begun. The official said Iran is also preparing for the agreement once it comes out of the sanctions.
‘Iran is working towards WTO accession. In the build up to that, they have shown interest. There are no negotiations at present. From India’s perspective, the sooner the better that we sign an agreement,’ the official said. This is a logical step forward in Delhi’s trade relations with Tehran, which has accorded India priority status for trade and investment in acknowledgement of its support during the hard times when the country was reeling under tough US and European Union-imposed economic and military sanctions on it.
Iran is looking at cooperation in agro-processing, IT, steel and hotels/tourism with India, while India plans to invest Rs 2 lakh crore in Iran’s Chabahar port and develop a gas-based urea manufacturing plant there.
In 2014-15, India’s exports to Iran stood at $4.17 billion while imports amounted to $8.95 billion, an increase from $1.44 billion and $7.61 billion, respectively, in 2006-07. India has been exporting automobile components, tools, motors and chemicals to Iran besides Basmati rice, sugar and other agricultural commodities. It imports mainly oil from Iran.
In October, industry chamber Assocham said an India-Iran trade agreement will help India expand the volume of exports to Iran, particularly of pharma, iron and steel, auto components. Also, Iran could serve as an outlet for Indian goods to countries in Central Asia and Afghanistan.
‘Iran is a good country to sign a trade agreement with because it will open up the entire West Asia market for us,’ said Ajay Sahai, director-general of the Federation of Indian Export Organisations. Sahai said in such a scenario, as per FIEO analysis, exporters would expect greater market access in sectors such as agriculture, pharma, chemicals, paper and paper products, synthetic textiles, garments, iron and steel products, aluminium products, two-wheelers, auto components, electrical machinery and parts, mechanical machinery and parts, writing instruments, gems and jewelry.