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India & Iran to find ways to maintain trade ties despite US sanctions

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Iran Foreign Minister Javad Zarif will visit India between 7 and 9 January.

New Delhi: Iran Foreign Minister Javad Zarif will be on an official two-day visit to India starting 7 January, even as New Delhi is walking the tightrope in balancing its strategic and business relationship between Tehran and Washington.

Zarif, who will be in India for the annual Raisina Dialogue organised by think-tank Observer Research Foundation (ORF), will meet External Affairs Minister Sushma Swaraj on 8 January. He is also expected to call on Prime Minister Narendra Modi during his visit.

The visit will witness both sides following up on the issues discussed during Zarif’s last trip to India in May 2018, when the two countries had vowed to not only boost bilateral trade ties, but also to identify ways in which the Modi government could support the Iran nuclear deal, also known as Joint Comprehensive Plan of Action (JCPOA), after the withdrawal by the United States from the deal and imposition of sanctions, sources told ThePrint.

Other agenda

Zarif, who will be accompanied by a high-powered business delegation, will also address a business forum under the aegis of the Confederation of Indian Industry (CII) on 8 January.

The main objective of this will be to discuss how to continue doing business transactions in Indian currency and all the modalities around it in the wake of the sanctions imposed by the US, while providing a platform for Iranian businesses to explore investment opportunities in India.

Iran became India’s third largest oil supplier during the period April-June 2018, exceeding Saudi Arabia. The total imports from Iran to India stood at $11 billion in April-November 2018, out of which 90 per cent of the shipments comprised crude oil.

On Monday, the Finance Ministry exempted rupee payments made for purchase of Iranian oil from a staggering withholding tax. The announcement comes close on the heels of Iran announcing investments to the tune of Rs 1,500 crores to expand a refinery operated by Chennai Petroleum Corp., which is planning to increase oil production to 9 million tonnes per year from about 1 million tonnes at present, according to its managing director S.N. Pandey.

Also read: Hassan Rouhani’s image is now nothing more than that of an Iranian scapegoat

Chabahar to be taken up

Sources also said that talks to expand India-Iran cooperation on the Chabahar port project will be discussed. The project was recently exempted from imposition of sanctions by the US due to Indian investments there and its strategic importance to Afghanistan, which is landlocked. The exemption also includes development of the Chabahar port along with an attached railway project and Iranian petroleum shipments to Afghanistan.

During the visit of Iranian President Hassan Rouhani in February last year, PM Modi had assured him that India will support the development of Chabahar-Zahedan railway line in order to fully utilise the port. However, the project has not seen much progress since then.

“What is happening right now is sowing of ties between India and Iran that is going on since the 1990s. This visit has to be seen from the strategic angle,” said Talmiz Ahmad, a former Indian envoy to Saudi Arabia, Oman and the UAE.

“It will provide a platform to the Iranian foreign minister to highlight the significance of the relationship between both countries while the US continues to remain dysfunctional and continues to give out mixed responses on Iran.”


Ties with Iran have also become critical for India due to the Islamic republic’s intervention in Afghan politics and the resumption of dialogue with the Taliban as the US has taken a stance of withdrawing troops from there.

On Monday, Iranian authorities had stated that Afghan Taliban had visited Tehran for peace talks, which, according to Ahmad, is of crucial importance for India.

Also read: Iranian investment to help boost capacity at Chennai Petroleum

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