Iran seeks investments from Indian firms
Iran’s economic affairs minister Masoud Karbasian says govts may discuss preferential trade
Iran has pitched itself as an untapped market with reformed foreign direct investment (FDI) policies for Indian firms. This comes at a time when India is planning to allow investments into Iran through rupee.
“Iran is a stable and desirable market for meeting a number of basic and livelihood needs for Indian merchants and we have plans to further liberalise our FDI policy.” Iranian Minister for Economic Affairs and Finance, Masoud Karbasian, said on Saturday. He said the country had received $24 billion worth of investments over the past two years.
Investment ties between the nations have suddenly hit the spotlight during the ongoing three-day visit by Iranian President Hassan Rouhani. India is said to be mulling plans to allow citizens to investment in Iran through the national currency, in a bid to circumvent the trade sanctions against the middle eastern nation. Currently, Indians can invest using the rupee only in Bhutan and Nepal.
The matter is expected to be on the agenda on Saturday, when Prime Minister Narendra Modi meets Iranian President Hassan Rouhani for bilateral talks.
Addressing business leaders at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) on Saturday, Karbasian said both governments are aiming to discuss several pacts to boost economic relations. This includes, a treaty signed on Saturday to avoid double taxation and fiscal evasion, as well as some proposed pacts to support joint ventures between firms from both countries and preferential tariff beteen the nations, he said.
“The Chabahar port is the symbol of multilateral transit cooperation. It is also a golden opportunity for investment for Indian corporates in the field of petrochemicals.” Karbasian said.
However, the plan faces several hurdles. The lack of a proper banking channel, procedural complications and the looming threat of sanctions against Tehran by the US might hold back Indian investments into Iran, trade experts said.
Among the problems, the absence of a proper banking channel between the nations has been highlighted. “Our banks are being ultra- cautious about what will happen if the US imposes some restrictions on financial transactions,” said Naushad Forbes, co-chairman of Forbes Marshall.
“Korean, German, Japanese and Swiss banks, among others, have established connections and their companies are doing business in the country. It is high time India has at least a couple of banks in Iran, so that an Indian firm is able to transact business.” he added. Difficulties in remitting capital has meant that even employees of the State Bank of India’s Tehran branch have to be paid salaries routed through Dubai, a senior industry source said. Uncompetitive labour and crippling sanctions have added to the difficult business environment.
Investors have also been put off by the countrywide protests against the ruling regime in Iran.
The lack of a proper banking channel and the looming threat of sanctions against Tehran by the US might hold back Indian investments into Iran