Indian investments heads for Chabahar FTZ

Iranian President Dr Hassan Rouhani and PM Modi.

One of India’s most prominent world scale projects is participation in the development of Iran’s Chabahar Port which can start off the International North-South Transport Corridor (INSTC) through nations along the resource-rich Caspian Sea-Central Asia to Russia.

India has been working with Afghanistan and Iran to create alternative, reliable access routes for trade, especially for its much needed energy, by-passing arch-rival Pakistan.

Under a May 2016 agreement with Iran, India has equipped and inaugrated in Dec 2017 two berths in Chabahar Port Phase-I with capital investment of US$85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease.

Another May 2016 pact with Iran, along with Afghanistan, gets India into the proposed Transit and Transport Corridor among the three countries using Chabahar Port as one of the regional hubs for sea transportation in Iran, besides multi-modal transport of goods and passengers across the three nations.

Chabahar Port has opened a new gateway to and from Afghanistan, Central Asia and beyond to Russia, an ever ready partner and lead initiator of INSTC.

The investment-driven projects, as more of these are to come along INSTC, were reaffirmed on 15-17 Feb 2018 during Iranian President Dr Hassan Rouhani state visit to India.

After talks and discussions in New Delhi, President Rouhani and Prime Minister Narendra Modi witnessed the exchange of documents and jointly addressed the following:
i. Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
ii. MoU on Exemption from Visa requirement for holders of Diplomatic Passports
iii. Instrument of Ratification of Extradition Treaty
iv. MoU on Cooperation in the field of Traditional Systems of Medicine
v. MoU on the establishment of an Expert Group on Trade Remedy Measures to promote cooperation in areas of mutual interest
vi. MoU on Cooperation in the field of Agriculture and Allied Sectors
vii. MoU on Cooperation in the field of Health and Medicine
viii. MoU on Postal Cooperation
ix. Lease Contract for ShahidBeheshti Port-Phase 1 of Chabahar during Interim Period between Port and Maritime Organization (PMO), Iran and India Ports Global Limited (IPGL).

The two sides recognized the unique role of Iran and India in promoting multi-modal connectivity within and across the region.

Both sides reiterated their commitment for early and full operationalisation of ShahidBeheshti Port at Chabahar where Phase-I by India, an investment of US$85 million, was inaugurated in December 2017.

India has leased the Phase I for 10 years.

The two leaders welcomed the lease contract for ShahidBeheshti port of Chabahar during interim period between port and Maritime Organization (PMO), Iran and India Ports Global Limited (IPGL).

They have directed that the Coordination Council should meet within the timelines stipulated in the Trilateral Agreement.

With a view to fully utilize the potential of the Chabahar Port and its connectivity to Afghanistan and Central Asia, India conveyed its readiness to support the development of Chabahar- Zahedan Rail line.

Both leaders encouraged greater efforts for cooperation in railway sector including supply of steel rails, turnouts and locomotives.

Both sides reiterated their commitment to INSTC and stressed on the need for inclusion of Chabahar within its framework.

Iran will hold an early meeting of the INSTC Coordination Meeting in Tehran.

The Chabahar port is being considered by India, Iran and Afghanistan as a gateway to major opportunities for trade with central Asian countries.

A joint statement issued after the two leaders meeting said both sides reiterated their commitment for early and full operationalisation of ShahidBeheshti Port.

The Iranian side expressed its readiness to enhance enabling environment to attract Indian private/public sector investments, in Chabahar Free Trade Zone (FTZ).

Iran has welcomed Indian investment to set up plants in sectors such as fertilizers, petrochemicals and metallurgy in Chabahar free trade zone on terms mutually beneficial to the concerned parties.

Indian Railway Construction International Ltd (IRCON) and Iran’s Construction and Development of Transportation Infrastructure Company (CDTIC), which are engaged in discussions, were tasked to finalise the technical parameters and financing options for the project in a time-bound manner.

Energy

The leaders agreed to intensify cooperation in the oil sector and agreed to move beyond traditional “buyer-seller” relationship and develop it into a long-term strategic partnership.

The two leaders agreed to continue and increase the pace of negotiation for reaching appropriate results in energy cooperation, including on Farzad-B gas field.

Negotiation on the Farzad-B gas field issue would be concluded soon.

Farzad-B was discovered by ONGC Videsh Ltd in the Farsi block about 10 years ago. The project has so far cost the OVL-led consortium, which also includes Oil India Ltd and Indian Oil Corp (IOC), over US$80 million.

New Delhi is keen to take gas from the field, which is part of OVL’s US$11 billion master development plan (MDP) proposal.

The proposal is to drill wells in Persian Gulf to produce gas, transport it to onshore via sub-sea pipeline and build a plant to liquefy the gas (LNG) for transportation in ships.

Banks-Commerce

A banking channel for business transactions is to be set in place. Permission for the Iranian Pasargadbank to open a branch in India was under advance consideration.

Both countries are to set up a Joint Committee of officials to examine feasible options, including Rupee-Rial Arrangement, Asian Clearing Union mechanism to establish functional payment channels.

The Double Taxation Avoidance Agreement has been finalized to promote business environment.

India and Iran have agreed to undertake text based negotiations on Preferential Trade Agreement as well as conclusion of Bilateral Investment Treaty in a fixed time frame.

Noting the importance of the role of businessmen and industry in promoting economic and commercial cooperation, the two Leaders welcomed the opening of the Confederation of the Indian Industry (CII) regional office in Tehran last year and the agreements for mutual cooperation signed between various trade bodies on both sides.

Iran Chamber of Commerce & Industry is to open an office in India.

India has assured of full support for Iran’s membership in the World Trade Organization. fii-news.com

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