Iran'S Ambassador To India Said The Two Countries Are About To Sign Preferential Tariff Agreements.

Iran ambassador to India Ali Chegeni, who attended the India PHD Chamber of Commerce event in August 28th (2019), indicated to the India investors that the two countries will sign a preferential tariff agreement to substantially reduce their import duties, many of which will be zero tariff.

At present, India and Iran have completed the 4 round of negotiations in accordance with the aforesaid agreement. The last round was held in Tehran, capital of Iran, in March (2019). The two sides discussed the contents of the draft agreement. The news pointed out that the new round of negotiations will be held in New Delhi, India. In addition to tariff agreements, India and Iraq are also promoting the signing of bilateral investment protection agreements and avoidance of double taxation agreements. Diplomats have pointed out that Iran is confident that the 3 agreements will be concluded by the end of this year.

The total bilateral trade between India and Iran in the 2018-2019 fiscal year amounted to US $17 billion, of which India exported only 3 billion 500 million US dollars to Iran. Asghar Omidi, an economic adviser to the Embassy in Iran, pointed out that the main commodities imported from Iran in India include oil and chemicals besides oil. As for exports to Iran, the products are mainly tablets, tea, coffee, spices and organic chemicals.

India is Iran's fifth largest source of imports and the 6 largest export market. Although Iran's largest export item to India is Plateau oil, Iran's non oil products exported to India in 2018 grew 18% over the previous year. India Federation of Indian Exports Organizations pointed out that although India's clothing exports to Iran have been growing slowly, India's pharmaceutical industry is unable to get access to Iran market.

Iran is still the second largest natural gas reservoir in the world and the 4 largest oil producing country in the world. Officials from the Ministry of Commerce and industry of India said that the Tehran authorities looked forward to launching a trade mechanism with rupee as trading currency with India, and hoped that Russia could be incorporated into the mechanism in the future. Delhi authorities have been looking forward to using rupees to pay for the purchase of Iran Plateau oil. India enterprises are also eager to enter the Iran market with a population of 82 million. Although many experts and traders say that the mechanism can reduce India's expenditure in the US dollar and prevent the rupee from continuing to derogate, the US economic sanctions against Iran have put the hope and desire of India behind.

However, trade and investment between India and Iran can still be carried out through the Chabahar port of Sistan Baluchestan Province in southeastern Iran, because the area is not within the scope of US sanctions. Ambassador Chegeni pointed out that the railway with a total length of over 600 kilometres, linking Chabahar port and Zahedan city of the province's capital is expected to be launched in early 2021.

Iran has only been unilaterally sanctioned by the United States and has not taken counter measures. India has also assured Iran that India will only recognize international sanctions rather than unilateral sanctions imposed on Iran by a single country. Iran has now secured India's investment in infrastructure expansion projects such as railways, roads and port development, and actively strives to invest in food processing and renewable energy industries in India, especially solar and wind energy.