India has expressed interest in signing a preferential trade agreement with Iran, once western sanctions on the Persian Gulf nation are lifted.
This will be India’s first trade agreement with a country in West Asia, which offer it a foothold to tap into other regional markets.
“We have a good relationship with Iran. It is a good market for us in the long term,” a senior commerce department official told Indian daily The Economic Times on condition of anonymity. “So, a preferential trade pact makes sense and we are interested. We are still at a conceptual stage on this.”
The official said by conceptual, he means both parties have shown interest in signing the agreement but no negotiations have begun. He noted that Iran is also preparing for such an agreement, once it comes out of the sanctions.
“Iran is working towards WTO accession. In the buildup to that, they have shown interest. There are no negotiations at present. From India’s perspective, the sooner the better that we sign an agreement,” the official said.
This is a logical step forward in New Delhi’s trade relations with Tehran, which has accorded India priority status for trade and investment in acknowledgement of its support during the hard times when the country was reeling under tough US and European Union-imposed economic and military sanctions.
Iran is looking at cooperation in agro processing, IT, steel and hotels/tourism with India, while India plans to invest in Iran’s Chabahar Port and develop a gas-based urea manufacturing plant there.
India has been exporting automobile components, tools, motors and chemicals to Iran besides Basmati rice, sugar and other agricultural commodities. It imports mainly oil from Iran.
In October, Indian industry chamber Assocham said an India-Iran trade agreement will help India expand the volume of exports to Iran, particularly of pharmaceuticals, iron, steel and auto components.
Also, Iran could serve as an outlet for Indian goods to countries in Central Asia and Afghanistan.
“Iran is a good country to sign a trade agreement, with because it will open up the entire West Asia market for us,” said Ajay Sahai, director general of the Federation of Indian Export Organizations.
Sahai said in such a scenario, as per FIEO analysis, exporters would expect greater market access in sectors such as agriculture, chemicals, paper and paper products, synthetic textiles ,garments, iron and steel products, aluminum products, two-wheelers, auto parts, electrical and mechanical machinery and parts, writing instruments, gems and jewelry.
