Iran Chamber of Commerce, Industries, Mines and Agriculture president has called for barter trade between Tehran and New Delhi in a bid to offset the financial challenges that have heavily affected Iran's trade with other countries.
“I firmly believe that given the current situation, barter trade will help both Iranian and Indian bilateral trade,” Gholam Hossein Shafei, president of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) told Ganesh Kumar Gupta, president of Federation of Indian Exporters Organization.
Shafei is heading a business delegation of 30 Iranian businessmen and entrepreneurs in a working visit to India accompanying Iran Foreign Minister Mohammad Javad Zarif.
Ganesh Kumar Gupta welcomed the proposal and vowed to “look into the matter”.
Preferential Trade Agreement (PTA) is another solution that can ease commerce between the two Asian countries. ICCIMA president urged the head of Federation of Indian Exporters Organization to push New Delhi government to move forward with ratifying it.
Renewed US sanctions were imposed on Iran 5 November after the administration of President Donald Trump withdrew Washington unilaterally from the 2015 international nuclear treaty with Iran. The punitive measures have stifled nearly all international banking and financial channels making trade very hard.
India has been one of the consumers of Iranian oil and has been granted a six-month sanctions waiver as the rising Asian power relies heavily on Iran crude. The country's UCO Bank has been handling financial transactions between the two since a long time ago but sanctions have also affected it. Nearly 1.5 billion dollars of Iran oil money has been blocked at the bank.
Reuters has reported that much of the amount has been cleared after the Indian government agreed to exempt the rupee payments from a hefty 42 percent withholding tax.
However, head of Iran private sector believes having all the transactions going through only one bank creates a “monopoly”. He has urged Indian authorities to designate several other banks to deal with the monetary issues. Kumar Gupta also welcomed the proposal but warned that “majority of Indian private banks are directly or indirectly exposed to the US market”.
On Tuesday, Indian Minister of Road and Highways, Nitin Gadkari, announced Bank Pasargadae, a major private Iranian bank, has been cleared to open a branch in Mumbai.
A high level representative from the Iranian bank is also in India to put the finishing touches on the deal.
“We are better prepared this time in dealing with Iran as per mechanisms and skills we have gained,” emphasized Kumar Gupta referring to the creation of a payment channel between the two nations to keep trade in national currencies.
“Immediately as soon as the financial mechanism was put in place, our exports ran as high as 5 billion dollars,” added the head of Federation of Indian Exporters Organization.
Iran-India trade volume during the past seven months rose to 12 billion dollars, according to the Indian official who said the two countries 2017 trade stood at 14 billion dollars. He said New Delhi imported 10 billion dollars worth of Iranian goods during the last seven months.
“These sanctions also provide good opportunity to look more closely to Iran and diversify our exports to the country,” highlighted Ganesh Kumar Gupta.
Rice makes up of majority of Indian exports to Iran. Textile is another big item Iran imports from the South Asian nation.
“Sanctions have caused challenges but we are very bullish in our trade with Iran and I’m sure that will cement our trade with the great nation,” emphasised Kumar Gupta.