Economy, Business And Markets

Indian FM Advances Transport, Energy Coop.

Indian FM Advances Transport, Energy Coop.
Indian FM Advances Transport, Energy Coop.

The Indian government is currently busy balancing its West Asia strategy. If Prime Minister Narendra Modi was in Saudi Arabia earlier this month, External Affairs Minister Sushma Swaraj at the weekend concluded a two-day visit to Riyadh’s rival, Tehran. Swaraj discussed recent developments in the region with her Iranian counterpart, Mohammad Javad Zarif, and talked about expediting work on the Chabahar Port and deepening trade ties now that Tehran was no longer under economic sanctions, wrote Indian daily Business Standard.

This West Asian tightrope is important not just for geostrategic reasons but also for India’s energy needs. Both Saudi Arabia and Iran, which don’t see eye to eye on most issues, are two of the biggest suppliers of crude oil to India. After years under sanctions, Iran is now ramping up its oil production.

Swaraj, before leaving for Moscow, also called on Iranian President Hassan Rouhani. He said New Delhi could look at Tehran as a “reliable partner” for its energy needs and termed the cooperation on Chabahar as a “defining partnership” between India and Iran.

In 2002, New Delhi and Tehran had signed an agreement to develop Chabahar into a deep-sea port. Once connected to Iran’s railroad network, the port will allow India greater trade not just with Iran but also give it a sea route to Afghanistan, and eventually access to Europe through the International North-South Transport Corridor.

The Indian side said it was keen to sign the commercial contract and extend $150 million in credit for Chabahar Port in the “very near future”. India’s Cabinet has already approved a $400 million credit line for supply of steel rails from India.

New Delhi considers the project a “strategic bulwark” in the region, as China is developing Gwadar Port, a key location in the China-Pakistan Economic Corridor.

At the meeting, the Indian side also welcomed the Iranian decision to keep the Farzad-B oilfield outside the auction basket.

Indian Oil Minister Dharmendra Pradhan recently visited Iran to discuss the issue. Indian companies had pulled out of the project after the economic sanctions imposed on Tehran, but the contract has been revived.

“The concerned companies have been directed to complete their contractual negotiations in a time-bound manner. The Iranian side had earlier communicated their gas pricing formula and expressed their desire for Indian investment in Chabahar SEZ,” Indian foreign ministry spokesperson, Vikas Swarup, said. The two sides reviewed the progress on INSTC and Ircon from India would be visiting Iran for discussions on the Chabahar–Zahedan railroad link.

Ircon International Limited is a New Delhi-based engineering and construction company specialized in transport infrastructure. The company is well known for undertaking challenging infrastructure projects, especially in difficult terrains in India and abroad. It has completed over 300 major infrastructure projects in India and over 100 major projects across the globe in more than 21 countries.

Swaraj and Zarif agreed that lifting of sanctions has opened the potential for expanding trade ties and that pending agreements like Double Taxation Avoidance Agreement, Preferential Trade Agreement and Bilateral Investment Treaty should be concluded.

India is looking at increasing its oil imports from Iran from the current 350,000 barrels a day. Iran has recently come out of years of crippling economic sanctions and is preparing to increase production. India is also preparing to invest $20 billion in the Iranian oil and gas, petrochemical and fertilizer sectors.