New Delhi: The Cabinet on Wednesday more than tripled the funding for exports to Iran to Rs 3,000 crore through the Export Development Fund (EDF) of the Exim Bank with a view to improving bilateral trade and strategic ties.
The proposal will step up the country's exports to Iran and deepen India's relationship as a strategic partner, said an official statement after the Cabinet meeting chaired by Prime Minister Narendra Modi.
The approval is for increasing the framework agreement between Exim Bank of India and a consortium of Iranian banks led by Central Bank of Iran for financing the purchase of goods and services from India to Rs 3,000 crore, from Rs 900 crore.
This will be done by utilising EDF.
"The proposal provides for domiciling two contracts of export of steel rails by STC and for the Chabahar Port Development project previously approved by the Cabinet under EDF," said Telecom Minister Ravi Shankar Prasad.
The Exim Bank and seven Iranian Banks led by Central Bank of Iran had negotiated a framework agreement in November 2014 for financing the purchase of goods and services from India by Iranian entities to the tune of Rs 900 crore under the EDF.
The increase in quantum to Rs 3,000 crore will enable the Exim bank to provide buyer's credit facility to Iran secured via sovereign guarantee from Iran for the exports.
"This will provide an opportunity to Indian companies to penetrate and enhance their footprint in Iran, along with facilitating the growing trade and investment with Iran. This will also help in employment generation and development of ancillary activity in India," the statement said.