‘Trade pact with Iran will help India expand exports volume'

Given India’s export capability in automobile and pharmaceuticals and the huge demand existing in Iran, potential exists to further enhance India-Iran trade relations, says ASSOCHAM.  

The Dollar Business Bureau

Signing a Preferential Trade Agreement (PTA) with Iran can fill up the demand gap for Indian exporters in several other economies, said the Associated Chamber of Commerce and Industry (ASSOCHAM). “India-Iran PTA will help India expand the volume of exports to Iran, particularly of pharmaceuticals, iron and steel, auto components. Also Iran could serve as an outlet for Indian goods to countries in Central Asia and Afghanistan,” the industry body said in a study. It said that with the US spearheading the regime of easy relations lifting sanctions on Iran, this is the right time for India to engage in trade pact with Iran. In 2014-15, Iran’s trade with India was around $13 billion and it was more than $16 billion before the Islamic republic was subjected to western sanctions. India’s trade deficit with Iran witnessed a rising trend in recent years. Therefore, a strategy to bridge the rising gap and enhance trade relations with Iran would entail identification of potential items of India’s exports at a detailed level in line with Iran’s imports demand and India’s export capabilities, the paper said. Given India’s export capability in automobile and pharmaceuticals and the huge demand existing in Iran, potential exists to further enhance India-Iran trade relations in line with potential sectors. Iran also offers huge opportunity for service exports mainly through education/ health services by attracting Iranian to Indian institutions and providing them in-country courses. Besides, India is a major source for Iran’s global imports of chemicals, cereals, articles of iron and steel and manmade staple fibres, accounting for a significant share in Iran’s global imports. However, in the case of other sectors of Iranian imports, such as capital goods, scientific/professional instruments, pharmaceuticals, vehicles other than railway, India’s market penetration is very low, and in some cases has even declined over the years, the paper noted. ASSOCHAM Secretary General D S Rawat said, “With the rest of the world facing a severe demand slowdown, Indian exporters can leverage the Iranian consumer sentiment which has been pent up for the last several years. As Iran and the US work out the finer details of lifting of sanctions, India should enhance its engagement with Iran and be ready for the opportunity which is set to arise in the near future”.

October 06, 2015 | 3:20pm IST.

The Dollar Business Bureau - Oct 06, 2015 12:00 IST
 
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