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After over a year of gruelling meetings, New Delhi is understood to have thrashed out a payment settlement mechanism with Tehran regarding India's non-oil exports to Iran.
Iran has agreed to settle all the dues to Indian exporters in rupees through any bank (public or private) willing to facilitate the payment, official sources told Business Line .
Also, future export transactions from India can be carried out through a similar mechanism.
The development comes amid the US trade sanctions on Iran.
CRUDE OIL IMPORTS
As regards crude oil supplies from Iran, Indian refiners are getting their shipment through the existing payment mechanism via Turkey.
However, on a cautious note, the refiners are looking at alternative oil sources or increasing imports from the existing suppliers outside Iran.
MRPL, the largest importer of Iranian oil into India, also buys from Saudi Arabia, Abu Dhabi and Kuwait, among others. MRPL board, which is meeting on Tuesday, would discuss the issue.
Meanwhile, Essar Oil is learnt to have renewed its long-term contract with Iran for 5 million tonnes per annum supplies.
$8-B GAP, BUT NO TAKERS?
On the non-oil front, so far hardly any of the exporters and bankers — barring a mid-size nationalised bank — have shown interest in using the settlement mechanism for exports, the sources said.
Many are worried that if they deepen trade ties with Iran, it might affect their business with the US and even with the European Union, which has decided in favour of sanctions.
There is at least an $8-billion opportunity immediately in Iran awaiting the bold among India's non-oil exporting community, they said. This amount is around the gap left by their counterparts, including from Europe, that have virtually put a halt to shipments to Iran on account of the sanctions.
Also, it is learnt that Iranians are not too happy with the quality of Chinese imports, the sources said, adding that Indian exporters, if willing, can fill this huge gap.
Indian exporters can benefit in sectors such as food items, steel, medium-density fibreboard, mining and project exports. There is scope for the bilateral trade, at $13.7 billion in 2010-11, to go up to even $50 billion in a few years, they said.
Exporters and bankers are now carrying out a cost-benefit analysis of doing business with Iran.
If they find that the benefits of exports to Iran are not as much as the cost of losing business in the US or other countries supporting the US, they may be hesitant to enhance trade with Iran, they added.
The US sanctions — unlike those by the UN — are unilateral and, therefore, by going ahead with boosting trade with Iran, India is not violating any international norms, say official sources.
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