Economy, Domestic Economy

Indians Seek Foothold in Growing Market

Indians Seek Foothold in Growing Market  Indians Seek Foothold in Growing Market

Indian firms are vying to secure a position in the Iranian market as nuclear talks between Iran and the P5+1 are reaching a tipping point, which is expected to see economic sanctions against the country lifted following a final accord.

Iran’s lucrative market is offering tempting prospects to foreign firms, but a web of sanctions imposed by the EU and US on Iran’s economy during the past years has kept them at bay.

 The Indians now fear that their rivals from the West will be able to overtake them to step into the Iranian market

Several economic delegations from India have visited Tehran in recent months to hold talks with the Iranian government officials over the issue of bilateral trade.

  Basmati Rice

A business delegation from India led by Indian deputy minister of commerce and industry, Rajeev Kher, traveled to Iran on April this  year to discuss resumption of Indian Basmati rice exports to Iran.

Iran is an important export destination for Indian Basmati rice as the country is importing about 20% of the rice grown in India. However, Iran began to impose a 45% import tariff on the commodity in a bid to counter the oversupply in the domestic rice market. The move led to a sharp decline in Basmati rice prices inside India.

“We have discussed all issues on basmati rice. Iran has adopted the Codex plus standard and expects all suppliers, including India, to comply with it. We will see how we can do that,” Kher said following his official visit to Tehran.

“Iran, for its part, gave assurance that it would increase imports of basmati rice from India as New Delhi is a chosen partner for basmati rice exports”, he added.

According to the Indian website Business Line, Iranian officials are likely to start issuing permits for importing Indian rice with low tariffs once again.

 India’s basmati rice exports to Iran declined to $600 million from $1.4 billion annually as Iran refused to issue fresh import permits as of October 2014.

  Oil Talks

Indian companies are also seeking to invest in Iran’s energy sector following the framework nuclear agreement reached between Tehran and P5+1 on April 2.

A high-ranking Indian delegation arrived in Tehran on Friday to hold talks over new oil contracts with Iran. Officials from ONGC Videsh and Mangalore Refinery and Petrochemicals Ltd accompanied the delegation that was headed by Shri Ashutosh Jindal, the director of Indian Ministry of Petroleum & Natural Gas.

India is Iran’s second biggest oil client after China. India’s oil imports from Iran relatively decreased in recent years as a result of western sanctions against Iran. Indian refiners imported 21.5 percent less Iranian oil than the previous month. The imports of 273,000 barrels per day (bpd) were about a third what India imported less than a year ago. The cut was reportedly in line with a policy to bring imports from Iran to 2013 levels. Iran’s oil exports are subject to the sanctions and Asian buyers must maintain purchases at levels not crossing 1.1 million bpd.

  Chabahar Synthetic Fertilizer Plant

The Press Trust of India (PTI) recently reported that India has proposed to invest $1.2 billion through a consortium of Indian fertilizer companies for the construction of synthetic fertilizer manufacturing plant in the Port of Chabahar in southeastern Iran.

An Indian delegation comprising government officials from India’s ministry of chemicals fertilizer and representatives from the largest Indian fertilizer companies like Rashtriya Chemicals and Fertilizer Limited (RCFL), Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFCL) and Gujarat State Fertilizers and Chemicals Limited (GSFCL) recently visited Iran to hold talks with the Iranian government officials over the project.

Chabahar is central to India’s efforts to open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.