Indo-Iran Bilateral

What is the issue?

• Iranian President Hassan Rouhani recently concluded his bilateral visit to India on a successful note.
• The visit has underlined the criticality of the Indo-Iran engagement.

What were the highlights of the visit?

• Qualitative Aspects - The importance of bilateral ties and the strategic imperative for their growth were stressed in the joint statements issued.
• Discussions were held on enhancing bilateral trade, investment, and ease of doing business between the India and Iran.
• The constitution of an expert group to recommend “trade remedy measures” and a Double Taxation Avoidance Agreement (DTAA) was also contemplated.

• Mr. Rouhani endorsed India’s bid for a permanent seat at the UN Security Council with the veto.
• The joint statement also had a toughly worded warning to the countries harbouring “sanctuaries for terrorism”.

• Quantitative Aspects - India and Iran signed agreements and Memorandums of Understanding (MoUs) on a variety of issues.
• India was also awarded the contract to operate the “Shahid Beheshti Port terminal at Chabahar, after the project is completed.
• Significantly, no announcement was made on the Farzad-B gas field that India has expressed an interest in, but a follow up on the same is expected.

What are the significant trade concession give to Iran?

• Just before Mr. Rouhani’s visit, India announced it would allow Indian investment in Iran to be done in rupee terms.

• Notably, this concession is presently enjoyed by only Bhutan and Nepal.
• This allows money lying in Indian banks to be repatriated as payment for Iranian imports, which is mostly oil.  
• Till recently, these funds were been blocked because international banks had refused to trade with Iranian entities, fearing further US sanctions.
• In return, Iran extended the credit period for oil payments from India by issuing more generous guidelines.

What are the larger geo-political implications?

• The present Indo-Iran bonhomie is also in the larger geo-political context, considering that the US has been openly hostile to Iran lately.
• Trump administration has been taking a hard line against the Iranian nuclear deal and even called for its scrapping and re-imposition of sanctions.
• Also, USA has recently asked countries to keep a check on their investments in Iran as these might be supporting terrorism and unrest in the Middle East.
• It is hard to predict if the implications if Indian overtures to Iran would impact the Indo-US ties or the Indo-Israeli ties.
• But irrespective of this, Iran is a crucial energy supplier to India and a gateway to central Asia, which mandates a continued cordial relationship to last.

Source: The Hindu