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The UCO Bank account is bulging with excess funds to the extent of Rs50,000 crore. It is an opportune time to take advantage of the relaxed situation and meet Iranian needs as far as possible
The Iranian nuclear deal with six European powers, including participation by the US, has brought some relief. Even though the Israelis called it a "historic mistake", followed by a spat in Vienna over the expert level talks on application of sanctions, discussions continued. It may be recalled that Abbas Araqchi, Iran's chief nuclear negotiator walked out, initially, because of what Iran had considered the imposing of new sanctions!
There is also the continuing fear and ambiguity whether the earlier restrictions on global insurers have been lifted, while the Indian shipping companies and insurers wanted a sovereign fund for protection. In addition, the Indian shipping industry employs only 8% of its total fleet of 1,150 ships to trade with Iran. Export of Indian goods to Iran has gone up to $3.6 billion so far and there are fair chances that this can still reach above $5.5 billion this year, covering a whole of agricultural products such as rice, soyameal, tea, pharmaceutical items, auto parts etc.
When the sanctions were in place, it may be recalled that to overcome the difficulties, Iran had agreed to take 45% payment in rupees which was credited to their UCO Bank account and the balance was being in Euros via Turkey.
Now, the UCO Bank account is bulging with excess funds to the extent of Rs50,000 crore or roughly $8 billion and it is an opportune time to take advantage of the relaxed situation and meet Iranian needs as far as possible. Basmati, one of the main items of popular demand in Iran, has picked up and so far sales have been brisk, with India hoping to ship about 1.5 million tonnes this year. This is practically 50% of India's export of basmati which hovers between 3 and 3.5 million tonnes.
In the past, and in recent times, India has attempted to take a little more serious interest and effort in export of non-traditional items, and bids are being made to obtain projects and services in Iran, including the construction and laying of roads, building railway lines, development of port facilities etc. In fact, to push up exports of these, the government has now allowed manufacturers to import raw materials, if needed, and to export the finished products with only a 15% value addition.
India is already associated with building of the port facilities at Chabahar and the proposed 70 km railway line between this port and Gorgan up in the north, close to Turkmenistan border will enable India to make inroads to this and other Commonwealth of Independent States and Russia. An extended rail link to Uzen can take the track to Kazakhstan. In fact, it is believed this transport corridor between Chabhar and Gorgan could change the entire trading scene, and travel time would be hardly 15 days. Currently, Indian trade with Central Asian markets is only $746 million, as against China's staggering $46 billion.
Besides, the Central Asian markets in CIS would enable India to reach the demand 55 million people and Uranium and fertilisers can also be obtained in return. Kazakhstan, for instance, has large reserves of rock phosphates and if the railway line can be expeditiously established, a new supply source for this essential fertilizer can be secured for India!
At the same time, India is trying to persuade Iran to build a 165 kms rail link to Astara in Azerbaijan, from its northern city of Rasht. This again will enable to India to get a good access route to CIS and Russia, and for which, India uses along route via Suez Canal to reach these land-locked nations. The Indian railroad authorities and companies like RITES, Ircon, SAIL, Bhel etc can actively take keen interest in these developments. Not only can they involved in laying of rail tracks, building of bridges wherever these are required, and supply of wagons would all help cement our relations with Iran and the countries involved.
In fact, during Afghanistan president Hamid Karazai’s visit to Iran, where the long term friendship and cooperation with Iran was affirmed with his Iranian counterpart, Hassan Rouhani, there is one more opportunity for India to actively suggest to both the presidents of friendly countries, that, when the Chabahar to Gorgan railway corridor is built, they could seriously consider couple of lines to connect into Afghanistan. They could also further the idea of laying connecting lines to other parts of Iran to expand the trade. If side tracks are laid to connect Afghanistan, India would not have to depend upon supply route via Pakistan. This is vitally important and strategically imperative.
This is a golden opportunity for India to send a strong and comprehensive trade delegation to Iran to investigate these opportunities, which will mutually benefit both.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)