The Commerce Ministry has urged the Shipping Ministry to increase the number of ships plying between India and Iran as inadequate transportation options are impeding trade.
Indian exporters are mostly dependent on global shipping lines that have proved unreliable and expensive following sanctions put in place by the West to curb Iran’s nuclear programme.
“Since Indian ships are insured locally and are not dependent on insurance and re-insurance from Western companies, these are not affected by economic sanctions by the US and the EU, like the global shipping lines,” a Commerce Ministry official pointed out.
It has written to the Shipping Ministry requesting that more Indian vessels be used on the India-Iran route. Of a fleet strength of over 1,150 ships, only around 8 per cent are deployed for trade with Iran.
Important market Iran emerged as an important market for Indian goods as Western countries had stopped trading with it following imposition of economic sanctions. The two countries use a rupee-trading account to make payments for oil and other merchandise in order to bypass global banking restrictions.
Export of Indian goods to Iran jumped 40 per cent last fiscal to $3.6 billion and has been on the rise in the current year as well.
“We are seriously constrained because of logistical problems. Right now, global shipping charges are soft, but it could harden at the slightest developments overseas,” the official said.
An Iranian delegation led by Central Bank Vice-Governor Gholamali Kamyab that was in India earlier this week, also identified concerns on insurance and re-insurance of shipping lines as a primary impediment for trade.
Although tensions between Iran and the West have eased following last month’s announcement of a truce, it has yet to translate into relief for insurance companies.
amiti.sen@thehindu.co.in