Iran expects to conclude a preferential trade agreement with India this year that will allow the two countries to cut tariffs on each other’s products and also engage in barter trade in the face of sanctions imposed by the US, Iran’s ambassador to India Ali Chegeni said on Wednesday.
The move is seen as a possible way to continue trade despite the crippling sanctions imposed on the Islamic Republic after the US walked out of the 2015 Iran nuclear deal.
India and Iran have held four rounds of talks on the preferential trade agreement so far, Asghar Omidi, commercial counsellor in the Iranian embassy told Indian businessmen at a meeting organized by the PHD Chamber of Commerce and Industry, a trade lobby group. The fourth round was held in March in Tehran with another round expected next month, he said.
“It is hoped that we can conclude the pact by this year 2019 end," Omidi added.
After the pact is finalized, Iran hopes that it can import Indian goods in return for goods that New Delhi imports from Tehran, bypassing payments in hard currency which is the target of US sanctions. It is unclear though whether this will prompt India to restart crude oil purchases from Tehran. In the wake of the US imposing sanctions on Iran’s financial and energy sector, India was forced to totally eliminate its imports of Iranian oil.
European countries such as France, Britain and Germany besides the European Union which had negotiated the 2015 Iran nuclear pact with the US, have been critical of Washington walking out of the deal and have reportedly worked out a payments mechanism to bypass US sanctions.
When asked, Chegeni said the European mechanism— known as Instrument in Support of Trade Exchanges or INSTEX—was yet to become operational. He said it was a system that allowed the exchange of goods without requiring direct transfers of money between Iran and EU companies -- something akin to the arrangement Tehran was looking to put in place with India.