India- Iran Relation: India and Iran are reportedly nearing an agreement on a proposed 10-year pact for the operation of the strategic Chabahar port. The signing of this agreement is expected once it receives political clearance from both sides. The Chabahar port, located on the Makran coast, plays a crucial role in facilitating trade between India and Iran, as well as providing access to Afghanistan and Central Asia.
The negotiations have mainly revolved around divergent opinions on an arbitration clause and a few other issues. However, progress has been made in narrowing the gap on the arbitration issue, and the parties are considering arbitration courts in locations like Dubai for resolving disputes.
Furthermore, both nations are exploring ways to replenish the rupee vostro account held by Iran, which has seen a depletion of reserves in recent months. Recharging this account is essential to facilitate Indian exports of commodities such as rice, tea, and pharmaceuticals to Iran.
Chabahar port is significant for Iran
The Chabahar port is significant for Iran as it serves as a trans-shipment point for various goods destined for places like Afghanistan and Central Asia. Meanwhile, for India, it offers a strategic gateway to West Asia and the Central Asian republics.
Iranian Foreign Minister Amir Abdollahian and Iran’s envoy to New Delhi, Iraj Elahi, discussed the proposed pact in August. Abdollahian highlighted India’s importance in Iran’s “Look to the East” policy and expressed optimism about reaching a “definitive deal” with India to expand the Chabahar port.
In addition to the port agreement, India and Iran are exploring ways to promote trade in local currencies, such as the rupee and the rial, as a means to revive commerce impacted by US and Western sanctions on Iran. These sanctions have led to the depletion of Iran’s reserves and hindered international banking channels for trade between the two countries. India and Iran have a history of significant trade, with India being a major importer of Iranian crude oil, among other commodities.
While specific details of the pact and measures to recharge the vostro account remain undisclosed, these developments signal positive progress in India-Iran relations and trade cooperation.
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