Iran’s Bank Pasargad will open a branch in the Indian city of Mumbai within the next three months, says India’s Minister for Road Transport and Highways, Nitin Gadkari.
“The government of India has given permission to an Iranian bank to open its branch in Mumbai,” India’s Financial Express cited Gadkari as saying during a meeting with Iranian Foreign Minsiter, Mohammad Javad Zarif, in New Delhi.
The Indian minister was referring to Bank Pasargad, a major Iranian private bank. “It is going to open within three months, and will be used for transactions (related to Chabahar port),” added Gadkari.
Zarif, who is on a 3-day visit to India, has welcomed the news, saying “we are very happy that both UCO Bank from India and Pasargad Bank from Iran are getting started with the business.”
UCO Bank has been handling majority of Iran export money. As the two countries move forward in increasing their bilateral trade in the wake of unilateral US sanctions, banking and financial channels have been a major hurdle due to restrictions caused by Washington’s punitive measures.
The two banks will facilitate transactions relating to operation of berths at Chabahar port. India has placed 85 million dollars worth of machinery order for the port, Gadkari said. The country has invested more than 20 million dollars to develop the first phase of Shahid Beheshti port in 2018 and 19, according to an Indian government document.
The South Asian nation has now officially taken over the operations at a part of the port after receiving more than 70 tons of corn from Brazil. This is the first time India will be operating a port outside its territory.
Cyprus-flagged bulk carrier Macheras docks at Shahid Beheshti port in Chabahar (Photo: India Shipping Ministry Statement)
The Chabahar port in the Sistan-Baluchistan province in the energy-rich nation’s southern coast is easily accessible from India’s western coast and is increasingly seen as a counter to Pakistan’s Gwadar port located at distance of around 80 km from Chabahar.
Gadkari said the Iranian minister has given many proposals including those on a barter system between the two nations. “They need steel, particularly rail steel and locomotive engines in large quantities, and they are ready to supply urea,” he was cited by the Indian media as saying. India can provide steel rails to Iran and the Persian gulf nation can provide urea to India, he added.
“For railway line, IRCON has to work. We have got proposal for locomotive engines …,” the minister added.
“We had very good discussions on both Chabahar as well as other areas of cooperation between Iran and India. The two countries complement each other and we can cooperate in whole range of areas… We hope that in spite of the illegal US sanctions, Iran and India can cooperate further for the benefit of the people of the two countries and for the region,” Iranian diplomacy chief said during the meeting.
“Chabahar port is very important for us. We are working very hard on it… Some problems were there, but the Iranian government and their minister… are also in the process to resolve all the issues as early as possible. I am confident that we will be in a position to start full function of Chabahar Port at the earliest,” Gadkari said.
India started interacting with Iran on Chabahar Port around 2003, but a major push was received in the second half of 2014, resulting in the signing of a memorandum of understanding (MoU) between the two countries for the development of Chabahar Port in May 2015.
This MoU translated into a formal 10-year contract for equipping and operating the Chabahar port, which was executed on May 23, 2016, during Indian Prime Minister Narendra Modi’s visit to Tehran.
On account of challenges in activation of the said contract, the foundation of an interim period contract was laid during Iranian President Hassan Rouhani visit to New Delhi in February 2018. There the two officials laid the groundwork for a formal short-term contract that was signed on May 6, 2018.
The first phase of the Chabahar port was inaugurated in December 2017 by Iranian President Hassan Rouhani, opening a new strategic route connecting Iran, India and Afghanistan bypassing Pakistan.
The Chabahar port is being considered as a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries, besides ramping up trade among the three countries in the wake of Pakistan denying transit access to New Delhi.
Under the agreement signed between India and Iran earlier, New Delhi is to equip and operate two berths in Chabahar port Phase-I with capital investment of USD 85.21 million and annual revenue expenditure of USD 22.95 million on a 10-year lease.