Wall Street Journal: India is looking to broaden its range of exports to Iran to help balance bilateral trade under an agreement that allows the countries to bypass Western sanctions, Indian industry and government officials said. The Wall Street Journal
By SAURABH CHATURVEDI And BIMAN MUKHERJI
NEW DELHI—India is looking to broaden its range of exports to Iran to help balance bilateral trade under an agreement that allows the countries to bypass Western sanctions, Indian industry and government officials said Friday.
India is one of the largest buyers of Iran’s crude oil and so far, 85%-90% of India’s exports to Iran has been agricultural products such as basmati rice and soymeal. But now, India plans to also export products such as textiles, pharmaceuticals, medical-diagnostic equipment, auto components and consumer goods.
“We are looking at diversification of our exports,” said Ajai Sahai, director general of the Federation of Indian Export Organization.
Last year, India and Iran entered into an agreement in which India would pay for about half of its crude oil imports from the Middle Eastern country in Indian rupees instead of U.S. dollars. The move followed U.S. sanctions that have shut down the global financial system for Iranian crude trade.
But the value of India’s exports to Iran is far lower than the value of its imports. India exported $2.95 billion worth of goods to Iran in the last financial year ended March 31, while its imports from Iran totaled around $11 billion.
India’s imports from Iran, which mainly comprise crude oil, are expected to fall to around $10 billion this financial year because of a decline in oil prices.
Also, tighter restrictions on Iranian oil sales, led by the U.S. and the European Union over concerns that Iran’s nuclear efforts went beyond Tehran’s proclaimed efforts to establish a nuclear-power program, will likely continue to weigh on Iran’s crude oil exports, which fell 39% in 2012.
Mr. Sahai said the trade organization aims to raise the value of Indian exports to Iran to around $4.5 billion to $5.0 billion in this financial year.
The Indian government has also been looking at ways to deepen trade ties between the two countries.
Textiles Secretary Zohra Chatterjee will be leading a trade delegation to Iran over this weekend to promote and market Indian textiles. Ms. Chatterjee is scheduled to sign a cooperation pact on textiles to enhance bilateral trade and industrial ties-ups.
India has about a 4% share in global textile exports, government estimates showed.
“Textile exports to Iran is only one of the options” for strengthening India’s presence in the global textiles market, a government official said, without specifying the other possibilities. The official declined to be named.
However, India could face difficulties in transporting goods to Iran.
“Definitely, shipping has become a challenge,” said Bhaskar Sarkar, executive director of government-backed engineering goods exports lobby EEPC India.
Recently, Hong Kong-based shipping lines said they would join global shippers in excluding Iran from their list of destinations. Shippers from the Chinese territory told Indian exporters they would stop operating Iranian routes from June 1, he added.