India, Iran to go back to table on trade talks

India and Iran are set to wipe slate clean and start talks on trade and economic ties.

The Indian authorities are working on a tight agenda for discussions with Iran’s Foreign Minister, who is expected here in the next few days. This is being seen as preparing ground for Prime Minister Narendra Modi’s likely visit to Iran this winter.

“When commercial and economic discussions start after a significant lag, then it is not revival of talks but fresh talks under new terms,” an official closely associated with the talks told BusinessLine .

New Delhi is hoping for improved trade in the unrestricted environment as the two main constraints to business – banking and shipping – will smoothen with easing of Western sanctions, another official said.

“The Minister (Iranian Foreign Minister) will hold consultations with officials from the Finance, Commerce, Energy and other ministries to discuss the new dispensation,” he said.

While the Indian officials agree that New Delhi could lose the preferential market access it got for a variety of items in Iran, as sanctions kept away most countries, it would gain from the overall increase in business, besides there will be no fear of retaliation.

India would also want to discuss prospects of greater project exports to Iran now that the country would engage in more construction and re-building activities.

Asked if ties with the US will still weigh on India-Iran talks, the official said, “Let us not forget India has a new government in place, while Iran also is looking at varied markets. Each will consider all pros and cons.”

One of the key areas of focus will be energy, particularly natural gas imports. But, Iran-Pakistan-India (IPI) pipeline may still remain a distant dream.

“India is keen to import gas, but it can always be flowed in through sub-sea pipeline route or in liquefied natural gas (LNG) form. IPI may not be the only answer,” another source said.

As regards crude imports from Iran, the gulf nation wants India to increase its take, but sources said Indian refineries will keep the commercial aspects in mind before increasing purchase.

Till now, Indian refiners have been getting discounts for buying Iranian crude.

“But, the situation has changed now. Iran also has a wider customer base. So, any buying-selling will be governed by economics,” he added.

The two countries will look at how to utilise the Iranian trade money which is with India and vice-versa. The two nations had earlier tried the barter concept, but it was not very successful.

Ajay Sahai, Secretary General, Federation of Indian Export Organisations, pointed out, “With private shipping lines free to operate from Iran, shipping costs will also come down for Indian exporters making their wares cheaper.”

However, the fall in the value of the Euro could prove to be a big worry for India.

European goods will now be relatively cheaper for Iranians to buy, and would prove to be a big competition for Indian products.