Centre talks trade, plans credit line with Tehran

Written by Sunny Verma | New Delhi | Updated: Sep 20 2012, 07:51am hrs
The Centre is planning to set up a line of credit with Iran to boost project exports and trade with the country. This follows a series of steps taken by the New Delhi to expand financing facilities for trade with Tehran to mitigate the side effects of the sanctions that have curbed international financial payments to Iran.

A senior official said, The department of economic affairs is discussing a (new) line of credit with Iran. This would help in supporting project exports and overall merchandise trade.

India is the third-largest importer of crude from Iran, accounting for some 12% of its crude oil imports. To cut its dependence on Iranian crude, India has increased imports from other countries such as Iraq, Saudi Arabia and UAE. To ensure smooth trade, the Indian government is taking several steps such as asking state-owned insurers to provide adequate cover to voyages going to Iran.

Besides, the state-owned Export Credit Guarantee Corporation of India (ECGC) has begun to provide insurance cover to Indian exporters doing business with Iran. The government is also considering allowing Punjab & Sind Bank as the nodal bank for making payments for purchasing oil from Iran.

The US-led sanctions against Iran are costing OPECs third-largest producer $133 million a day. Shipments from Iran have plunged by 1.2 million barrels a day, or 52%, since the sanctions banning the purchase, transport, financing and insuring of the nations crude began July 1. India's July crude imports from Iran dipped 40% from the corresponding month last year. The bilateral trade between India and Iran stood at $13.6 billion in 2010-11.