EghtesadOnline: India would like to trade with Iran without violating any international laws, Indian Commerce and Industry Minister Suresh Prabhu said on Thursday.
“India will not violate any international law and within the framework of international law, we would like to work with Iran in a manner that we can deal with rupee trade wherein both countries can trade the items of mutual interest,” the minister was quoted as saying by Press Trust of India.
“So Iran wants to buy something from India and we want to buy oil."
In May last year, US President Donald Trump withdrew from the 2015 nuclear accord with Iran, reimposing economic sanctions against the Persian Gulf nation. Some sanctions took effect from August 6, 2018, while those affecting oil and banking sectors kicked in from Nov. 4, Financial Tribune reported.
India's UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the US financial system.
Iran is India’s third-largest oil supplier after Iraq and Saudi Arabia. It was India’s second biggest supplier of crude oil after Saudi Arabia until 2010-11, but Western sanctions over its suspected nuclear program relegated it to the seventh spot in the subsequent years.
Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, a term not available from substitute suppliers of crude, such as Saudi Arabia, Kuwait, Iraq, Nigeria and the US.
Trade between India and Iran increased to $13.8 billion in 2017-18 from $12.9 billion in the previous fiscal. However, India’s exports were only worth $2.5 billion to Iran.
India-Persian Gulf Bridge
Iran on Wednesday offered to be a bridge between India and the Persian Gulf region through its connectivity corridor.
Iranian Foreign Minister Moahmmed Javad Zarif while delivering the ministerial speech at the Raisina Dialogue in India suggested that his country, which is a key link to the International North–South Transport Corridor, can also be the connectivity corridor between India and countries in the Persian Gulf.
Zarif also suggested a dialogue forum between Iran and other countries in the Persian Gulf based on the principles of territorial integrity and sovereignty in the backdrop of Iran’s strained ties with certain Persian Gulf countries.
The INSTC project will facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.
The corridor will connect Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network. This means goods could be carried from Mumbai to the Iranian port of Bandar Abbas and further to Baku. They could then pass across the Russian border into Astrakhan before proceeding to Moscow and St. Petersburg, before entering Europe.
INSTC would substantially cut the travel time for everything from Asian consumer goods to Central Eurasia’s natural resources to advanced European exports. The multimodal route is estimated to reduce the time and cost of transportation of goods between India and Europe from 40 to 15 days.
The corridor is said to have the potential of diverting up to 10 million tons of India-Europe trade to the route.
Chabahar: A Hot Spot Along INSTC
Iran's strategic Chabahar Port located in its southern coasts is a major hot spot along INSTC.
India has officially taken over operations of the strategic Chabahar Port in Iran's Sistan-Baluchistan Province. This is the first time India will be operating a port outside its territory.
“The government of India took over the operations of a part of Shahid Beheshti Port, Chabahar, in Iran during the Chabahar Trilateral Agreement meeting held there on Dec. 24, 2018,” the Indian Shipping Ministry said in a statement on Monday.
The heads of Indian, Iranian and Afghanistan delegation jointly inaugurated the office of the Indian SPV-India Ports Global Chabahar Free Zone at Chabahar.
The Indian company is a joint venture between the largest container port in India's Jawaharlal Nehru Port Trust and Kandla Port Trust, a seaport in Gujarat state in western India, for the development of ports overseas.
“The physical takeover of the terminal area, cargo handling equipment and office building was completed by Dec. 29, 2018,” the statement said.
Commercial operations began at IPGCFZ with the arrival of a vessel, it said, adding that a Cyprus registered bulk carrier had arrived at Chabahar with 72,458 tons of corn cargo.
The vessel MV Macheras berthed at the terminal at 0130 hours on Dec. 30, 2018, and IPGCFZ carried out its first cargo operation by discharging the imported cargo (ex-Brazil) using pneumatic un-loaders, it added.
“This step marks the beginning of a long journey. India has written history with its engagement in Chabahar and is now leading regional cooperation and joint efforts to support landlocked Afghanistan. This is the first time India will be operating a port outside its territories,” the statement said.
India has already placed $85 million machinery order for Chabahar.