Iranian government has kept funds worth $4 billion, interest free, in UCO Bank, due to Islamic principles of not taking 'interest'. While respecting this gesture, what we can suggest to them is to spend a billion or two for investing in certain industries in India that would benefit both countries

According to press reports, India has pledged $100 million for upgrading and development of the Chabahar port in Southern Iran.  This was stated by Shaida Mohammad Abdali, the Afghan envoy to India.  India is already associated with this development as also in building a rail-road project from the port to Gorgan, some 70 kms away.

This upgrading will not only help increase our shipments to Iran, but also facilitate the movement of Indian cargo to other destinations in the Central Asian countries, including Afghanistan. A separate track has to be established so that from the main line, a subsidiary line can be drawn to enter into Afghan territory.

It is also known that India and Iran are involved in the rail-road development from this port, while upgrading it.  But this also opens up the prospects for India to garner interest for further extension of railway network in and around the area, particularly in the north, as it will help Iran to develop its exports.

Abdali, the Afghan envoy, according to the press, stated that the draft on this pledge has been circulated and welcomed by all concerned as it will help trade to grow.

In the meanwhile, it may be recalled that to overcome the US sanctions and to maintain the tempo of Indo-Iranian trade, Iran had agreed to receive part payment (upto 45%) in rupees, which was credited to their account, maintained with UCO Bank in Kolkata.  From this, Iranian imports from India was covered and settled. This has been growing for some years now, and currently the Rupee balance is in  excess of $4 Billion, which UCO bank retains in credit, on an interest free basis!

Iran has been one of the leading importers of Basmati from India, valued at $1 billion apart from a host of other items such as soya, pharmaceutical and engineering products. However, our total exports of all these items do not exceed $5 billion, whereas imports of petroleum alone are valued at $10.3 billion. India needs to double up on its efforts to reduce this huge deficit.

It is therefore gratifying to note, from a recent statement made by the Chairman of EEPC (Engineering Export Promotion Council), that the first quarter, in this fiscal, saw a great leap in export of engineering goods from $52 million last year t $177 million. No doubt, efforts are being made to increase this in the next nine months. It is hoped that Anupam Shah, the chairman of EEPC would organise a trade delegation to sell more engineering goods and services to Iran soon.

At the moment, the NDA government is working out many important issues on hand, including extensive discussions with world leaders. In the meantime, it is necessary to plan out some important strategic moves as far as Iran is concerned. To our mind, this could include the following steps:

      a) sending a high powered trade delegation to Iran and organizing an Indian Trade Fair in Teheran

      b) trade team must include a separate group who should concentrate on joint ventures - such as putting up fertiliser/urea plants in Iran that would supply finished products back to India.  

      c) a separate team to work on the prospects of railway network building, supply of wagons, coaches etc

      d) a financial team that would investigate the possibilities and suggest to the Iranian government how the Iranian rupee funds could be utilised, bringing in mutual benefit.

The reason why the Iranian government has kept its funds, interest free, is due to Islamic principles of not taking "interest". While respecting this gesture, what we can suggest to them is to "spend" a billion or two "investing" in certain industries in India that would benefit both.  

If we extend this idea further, Iran could become a joint venture partner in one or two fertiliser units, to be set up in India, in which part of the capital could come from the rupee account funds with UCO bank.  Then, they could also supply Iranian "gas" as working capital to make the fertilisers (urea, for instance). The profits on such ventures could be given to them and this would not constitute "interest" and the purpose of both the nations will be solved!

It is time we start thinking outside the box!

(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.)