Next stop Tehran: Delhi steps up talks with Iran for $5-bn railway export plan

Written by Arun S | New Delhi | Updated: Jun 16 2014, 13:54pm hrs
TehranIndia is exploring possibility of helping build more railway lines in Iran, in addition to Chabahar project.
Even as New Delhi keeps a close watch on the recent unrest in Iraq, it is expediting talks with Tehran for over $5-billion worth project exports from India to Irans railway sector.

Official sources told FE that Tehran has agreed to seek lines of credit (LoC) from the Export-Import Bank of India (Exim Bank) in rupee for financing such railway project exports (of relatively long term in nature) from India to Iran. India had given Iran the option of choosing either using the rupee payment mechanism or the LoC.

India is exploring the possibility of helping build more railway lines in Iran -- in addition to the Chabahar railway project -- to connect their manufacturing and mining centres to their ports, the sources said. Project exports from India to Iran in the railway sector will include supplying and laying of tracks, building signaling systems, carrying out electrical work and upgrading existing rail operations. The Iranian government, according to reports, is planning to expand the countrys railway network annually by 500-1,000 km to ensure it touches 25,000 km by 2025 from around 13,000 km now.

The Exim Bank data as on January 10 shows that it had in December 2009 disbursed a $200-million general purpose LoC (with tenure of up to 8 years) to many Iranian commercial banks for financing Indias exports to Iran. The ministries of finance and commerce are in discussions on LoCs in rupee to Iran for long-term project exports, especially in the rail sector.

Irans interests in expanding their rail network match our economic and strategic interests too. Once the initial projects take off, it will lead to large orders from Iran. In the near-term, we are targeting project exports in the rail sector worth at least $5 billion, an official said. Indias motive in helping build rail links within Iran, especially to Chabahar and other ports, is that they can then be used as a gateway for accessing other Central Asian markets and Afghanistan.

Public sector companies such as Ircon International are taking forward their work on laying tracks and setting up other related equipments, while others such as SAIL, Essar and Jindal are looking at exporting steel for building railway infrastructure. Iran had also sought help from the public sector consultancy firm RITES and logistics major CONCOR for feasibility studies.

RITES has already helped to design the new locomotive overhaul workshops at Karaj and a design of rail system for sugarcane transportation for the Iran railways, while Ircon had completed a relay-based interlocking system (a signaling project) for 25 stations in Shahrood-Mashad section for $25 million during 1999-2006 and supplied signalling equipment to Iran railways worth $1.2 million in 2008.