Iran proposes free trade agreement with India: Kher

Expecting the removal of trade sanctions imposed on it by western nations, Iran has proposed a free trade agreement with India to boost bilateral trade and investment.

New Delhi: Expecting the removal of trade sanctions imposed on it by western nations, Iran has proposed a free trade agreement with India to boost bilateral trade and investment.

The matter came up for discussion during the recent visit of Commerce Secretary Rajeev Kher to Tehran. He was there for the first meeting of the joint working group (JWG) of the two countries.

"Iran is very keen to enhance its trade relations with India. It wants to increase its share in the global trade and they said that India can play a very major role in fulfilling that ambition," Kher told PTI.

"Iran has proposed to negotiate a preferential trading agreement with us. I told them that India will consider this proposal very positively and will soon respond after taking the appropriate mandate from the government," he added.

Kher said the pact would be beneficial for India as through Iran, it can get market access to some parts of Europe and Africa.

He said he met his Iranian counterpart and members of several industry chambers in Tehran and now the JWG would meet every year as it would institutionalise the framework.

Iran is in the process of reaching an understanding with the six world powers on its contentious nuclear programme, which may ultimately lead to lifting of trade sanctions on the Islamic nation. The move would help Iran to enhance its trade ties with its trading partners including India.

On discussions over basmati rice exports to Iran, Kher said India raised the issue of high import duty, declining imports of the commodity from India and stringent standards.

"We discussed all the issues on basmati rice. Iran has said that they have adopted the Codex plus standard and they expect all their suppliers to comply with them. Indian exporters would have to comply with that. We will see how we can do that," he said.

Codex is an international standard for food trade for safety, quality of products.

Iran, however, assured that it would increase imports of basmati rice from India as "New Delhi is a chosen partner for basmati rice for them", he added.

India's basmati rice exports to that country have declined to USD 600 million from USD 1.4 billion annually. Iran has not being issuing fresh import permits since October 2014.

India's overall basmati rice exports declined by over six per cent to 2.57 million tonne during April-December 2014 as compared to 2.74 million tonnes in the same period last year.

Iran is the largest basmati rice importer, accounting for around 60-65 percent of total basmati rice exports from India. Basmati rice was India?s second largest export commodity after buffalo meat to Iran.

Kher indicated that lifting of trade sanctions would help Iran to increase oil imports to India.

India had cut its imports from over 18 million tonnes five years back to 11 million tonnes in 2013-14. India is one of the largest importers of crude oil from Iran.

India and Iran agreed to increase cooperation in sectors including petroleum, petro-chemicals, raw materials like gold, stones and rare earth metals, Kher said.

"They are focusing on boosting their manufacturing sector. They want investment petrochemicals, engineering, pharma and agro-processing. In all these sectors, India fits very well," he said, adding that India can increase trade in textiles, apparels and healthcare services.

"Iran also has high ambition to develop its rail infra, power infra, irrigation facilities and India has strength in engineering and projects exports," Kher said, adding that India could extend buyers credit line to Iran.

"We have also offered buyers credit for Chabahar port. First phase requirement will be USD 150 million. Iran wants to buy rail wagons to expand its rail network," he said.

Further, both the sides deliberated upon the International North-South Corridor transit route, which is a shorter route for India to access Russian and eastern European markets.

"This route will drastically reduce transactions cost for India. To facilitate this route, India has already done a study on this. There is a need to popularise it. In June, we will organise a conference on this and will invite all the stakeholders.

"We will invite all the countries, private sector representatives from shipping and rail industry besides government officials," he said.

On enhancing investments, India informed them about its strengths in areas such as IT, auto, engineering, pumps and compressors.

"Iran wants India's investment in these sectors. Iran also wants to become a WTO member and India would help in that," Kher added.

On tea and pharmaceutical sector, Iran would send a team of experts to India to study these sectors to increase trade.

Both the sides also emphasised on the need to strengthen banking services in each others countries.

India and Iran bilateral trade amounted to USD 15.27 billion in 2013-14, as against USD 14.94 billion in the previous fiscal.

Zee News App: Read latest news of India and world, bollywood news, business updates, cricket scores, etc. Download the Zee news app now to keep up with daily breaking news and live news event coverage.