India, Iran exploring settling trade in rupee, establishing banking mechanism: Iranian foreign minister

India and Iran have “surveyed” the possibilities of settling trade transactions in rupee or through barter system, along with discussing a need to establish a banking mechanism, foreign minister of the Middle Eastern country, Hossein Amir-Abdollahian, said on Thursday.

New Delhi and Tehran have also agreed to “precipitate” investment in the Chabahar Port which is being developed with the help of India, the visiting minister said, adding that he discussed the issue of “sluggish” pace of the port’s development with his Indian counterpart S Jaishankar.

“Yesterday, we discussed with Indian high officials a special need with my colleague the external (affairs) minister on the need to establish a banking mechanism,” Abdollahian said at an event organised by the World Trade Centre here.

The two sides “surveyed” the possibility of trade in local currency, including rupee, or otherwise barter, he added.

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He said there are existing mechanisms within the framework of international law which can help in reviving the “banking and financial interaction”, pointing out that Tehran has implemented such a mechanism with a dozen countries already.

In another event later in the evening, Abdollahian said India and Iran have agreed on the “need to maximally activate the banking mechanisms between the two countries.” Abdollahian, who is on a three-day visit to India, addressed industry representatives in the financial capital at two separate events.

“As we speak, we’ve in mind recognised legal mechanisms that can be conducive for development of trade between India and Iran,” the Iranian foreign minister said.

There are “ample opportunities” for India and Iran irrespective of the “unilateral sanctions” imposed by the US, which will not last for long, he added.

Abdollahian, who met Prime Minister Narendra Modi and National Security Advisor Ajit Doval on Wednesday, said New Delhi and Tehran have agreed to “delineate a long term roadmap”.

He further said Modi is “way forward” on such thinking about a long-term partnership, and stressed during the meeting that both the countries are already implementing the roadmap even before formalising it.

The foreign minister said there were detailed and forward looking discussions on economic and trade aspects, adding that Indo-Iranian trade was centuries old.

He also said Chabahar Port is a very reliable infrastructure asset and added that it is already functional with help from Indian investment.

“We agreed to precipitate the investment in this port,” he said, adding that discussions were also held on energy.

Later, speaking at an event organised by the Federation of Indian Export Organisations, he highlighted the sluggish pace of the strategically important port’s development and hoped that both the countries will be able to resolve the issues.

A “special heed” was paid to the capacities in oil, petroleum and gas that exists within Iran, he said.

Iran has kept the domestic trade routes across the country ready and active to help the cause of trade, especially amid the war triggered by Russian invasion of Ukraine, he added.

He said further developing and consolidating the bilateral relationship, which formally started 160 years ago with the establishment of a diplomatic presence in then Bombay, is in the interest of both the

India and Iran should compliment, and not compete, with each other, he noted.

There is a “bright and luminous” future for New Delhi-Tehran ties, he said, adding that both the countries’ leadership is determined to take the trade volumes to new highs after getting dented by the sanctions.

As a follow-up to his visit, he said, the Deputy Minister for Economic Diplomacy will be visiting India in the next three days and also visit the financial capital.

Meanwhile, Ishraq Ali Khan, the executive director of the state-run UCO Bank in India, which is used as a conduit to settle payments with Iran since 2012 following the sanctions, affirmed its support to Indian exporters.

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