Iran’s trade with India reached $2.29 billion from the beginning of 2022 to the end of November, latest data released by India’s Ministry of Commerce and Industry show.
Exports to India hit $606 million during the period, registering a 63.09% rise compared with the corresponding period of the previous year. The exported goods mainly included petroleum products worth $156 million, dye intermediates worth $147 million, fresh fruit worth $131 million and residual chemicals and allied products worth $40 million.
Iran’s imports from India during the period stood at $1.68 billion, registering a year-on-year rise of 51.24%. The imports mainly included rice worth $1 billion, tea worth $79 million, sugar worth $66 million, other types of rice worth $61 million and organic chemicals worth $44 million.
Bilateral trade hit $1.69 billion in 2021, with Iran’s export standing at $409 million and imports at $1.28 billion.
Iran Suspends Rice, Tea Imports
A temporary ban has been placed on the import of rice from India in a bid to balance Iran’s trade with India, according to the secretary of Iran’s Rice Suppliers Commission.
“The ban is not restricted to rice and includes other agricultural products such as tea. It will be lifted as soon as bilateral trade is balanced, or registers surplus,” Masih Keshavarz was also quoted as saying by IRIB News.
The comments made by Keshavarz came after the Indian English-language business daily The Economic Times reported that Iran has completely stopped signing new contracts for importing tea and basmati rice.
The report said a section of traders believe Iranian importers could be delaying purchases, as New Delhi and Tehran are working on a rupee trade settlement agreement.
The development will have an impact on exports of these commodities, particularly tea, as Iran imports around 30-35 million kg of orthodox tea and about 1.5 million kg of basmati rice from India every year, exporters said.
While tea exports to Iran had slowed down earlier, buyers from there “stopped registering new contracts from last week”, said Anish Bhansali, managing partner of Bhansali & Company, a leading tea exporter to Iran.
While basmati rice exporters are also facing the same problem, the impact would be less as basmati exports have risen on high demand and rise in prices of commodities globally since the Russia-Ukraine war.
Keshavarz noted that at present, Iran’s rice reserves are sufficient and that the import ban will not cause any problem.
“Since the beginning of the year [March 21], the private and public sectors have imported 921,000 tons and 223,000 tons of the grain respectively. But during the last few months of the year, as rice consumption has risen, we plan to import around 400,000 tons,” he added.
Shaegan Adibi, a manager of the Iranian Agriculture Ministry’s “Rice Project”, says Iran’s rice production this year has exceeded 2.4 million tons to register a 30% rise.
Converging Interests in Trade, Connectivity
New Delhi and Tehran have converging interests in trade and connectivity, according to the Diplomat.
Iran’s full membership in the Shanghai Cooperation Organization, where India is also a member, could accentuate mutual efforts to focus on connectivity projects like Chabahar Port, which links India with the International North-South Transportation Corridor.
Since India began operations at Shahid Beheshti Terminal of Chabahar in late 2018, it has handled bulk cargo transshipments from Australia, Bangladesh, Brazil, Germany, Russia and the UAE.
Experts say the throughput can be significantly enhanced, if the port is linked to the rail network.
India took up the development of Shahid Beheshti Terminal under a tripartite agreement on Chabahar signed with Iran and Afghanistan in May 2016. Afghanistan is effectively no longer part of the arrangements since the takeover of the country by the Taliban last year, though the port has benefited from a US waiver on sanctions imposed on Iran.
India pledged to invest $85 million in the terminal and has so far supplied cranes and other equipment worth $24 million. The people pointed out there is a need to expedite the supply of more equipment such as heavy gantry cranes for transferring cargo from ships to land.
India and Iran are close to striking a long-term agreement for operations at the strategic Chabahar Port, with the matter held up only by differences on a clause related to arbitration, Hindustan Times reported recently, citing people familiar with the matter.
The long-term agreement, valid for a period of 10 years and to be extended automatically, is meant to replace an initial pact that covered India’s operations at Shahid Beheshti Terminal and has been renewed on an annual basis.
The move comes at a time when China has been showing growing interest in investments in ports and other coastal infrastructure in Iran, and the Iranian side has been pressing New Delhi to step up development of Shahid Beheshti Terminal, which is operated by the state-run India Ports Global Limited.
The long-term agreement figured in discussions during the Indian Shipping and Waterways Minister Sarbananda Sonowal’s visit to Iran in September, especially his meeting with Iran’s former roads and urban development minister, Rostam Qasemi.
The issue holding up the long-term agreement is not major and relates only to jurisdiction for the arbitration of differences on any matters, the people said.
Under Iran’s Constitution, such arbitration cannot be referred to foreign courts, and a proposal under the agreement would require a constitutional amendment, which would be difficult, they pointed out.
Both sides, however, are hopeful of the speedy resolution of this matter, as legal and technical experts are working on it, the people said.
At the same time, the Iranian side has been pushing India to speed up the development of its operations at Chabahar Port, including the completion of the 700-km Chabahar-Zahedan railroad.
Less than 200 km of this crucial rail link remain incomplete and in the face of hesitation to deal with a construction company with links to the US-sanctioned Islamic Revolutionary Guards Corps, Tehran has suggested a contract can be finalized by the Indian side with another entity, the people said.
During Sonowal’s visit, the two countries decided to form a joint technical committee for the smooth functioning of the port.
India remains “fully committed to develop Chabahar Port to realize the vision” outlined during Indian Prime Minister Narendra Modi’s visit to Iran in 2016, Sonowal said at the time.
IRISL Opens Offices in India
The Islamic Republic of Iran Shipping Lines has opened offices in different parts of India to boost its activities in the International North-South Transportation Corridor. The group will ship exports from eastern India, which are transported by rail, to the ports in the west.
IRISL is strengthening its activities in India, the INSTC corridor and Russia. Following negotiations with the Indian Railways, Indian manufacturers and traders are planning to deliver their exports from Kolkata in eastern India through the corridor to Russia and the Commonwealth of Independent States using the IRISL fleet, Otaghiranonline.ir reported.
Given that the Indian government and businesspeople are eager to expand their ties with Russia, the CIS countries and Iran through the north-south corridor, IRISL has been offering regular transportation services for months. It has launched container shipping from the western ports of India to the southern ports of Iran.
In the meantime, executive and marketing moves have been made to strengthen and develop cooperation with Indians for the transportation of the country’s exports and imports to Russia and CIS.
INSTC is the best route for the transportation of goods between India and Russia; the transit time is between 20 and 25 days, compared with transportation through the Suez Canal to Russia and Central Asian countries, which takes between 40 and 50 days. In fact, no other route can compete with the north-south corridor in terms of transit time and transportation costs to access the Russian and CIS markets. In addition, IRISL plans to reduce the transit time between India and Russia to 15 days.
On the other hand, IRISL has taken effective steps in recent months to strengthen its activities in the north-south corridor by investing in the Russian port of Solyanka on the coast of Caspian Sea.
