India’s project exports to Iran is set to get a boost this fiscal with several deals in the rail and road sectors already in the pipeline. The move will reduce India’s pending oil payments to Iran.
“Project Exports could increase India’s over-all goods exports to Iran by more than half to an estimated $8 billion which could substantially wipe out its trade deficit with the oil-rich nation,”
a Commerce Ministry official told.
Growing exports will help Iran use up the balance of over $3 billion lying in its Rupee account with the UCO bank and also take care of the pending oil payments that India owes to the country in Euros.
India has been paying for 45 per cent of the oil purchased from Iran in rupees since late 2012 as international banks refused to facilitate payments in the Euro or Dollar fearing sanctions from Western countries.
“India actually owes a much larger amount to Iran as the 55 per cent of the oil payment that it was supposed to make in Euros is pending since early 2013 because of increased sanctions by the West. Increased exports from India could also take care of the pending payments in foreign currency,” the official said.
Iran is in talks with public sector companies such as SAIL, IRCON and RITES and some private sector players for implementing turnkey projects in the country such as road and rail links connecting Iran’s Chabahar Port to Turkmenistan.
The project deals with Iran, which continue to reel under economic sanctions imposed by Western countries for its alleged nuclear activities despite some recent relaxations, are expected to be soon finalised, the official said. India has offered buyer credits through the Export Import Bank of India for the projects.
Iran is also interested in roping in India for setting up hydro-electricity projects and upgrading the Chabahar port. The Jawaharlal Nehru Port Trust and Kandla Port are already negotiating with the country and talks are expected to be initiated with the National Hydel Project Corporation.
The country’s trade deficit with Iran narrowed to $8 billion in 2013-14 from $11 billion in 2012-13 as India reduced oil imports and exports grew to help Iran gainfully utilise the Rupee payments for oil. Exports, which were $2.4 billion in 2012-13, touch $5 billion in 2013-14.
