India has offered incentives for exports to Iran, announced the trade ministry.
A step which industry officials said – on Tuesday – could double the country’s sales to sanctions-hit Tehran to $6 billion in the current fiscal year that began in April.
Indian traders will now be allowed to turn around imports and sell them to Iran, as long as they have added at least 15 percent in value to the goods, the Directorate General of Foreign Trade, an arm of India’s trade ministry, said on its Website.
“Accordingly, exports of such goods to Iran which have been imported against payment in freely convertible currency would be permitted against payment in Indian Rupees also, subject to at least 15 percent value addition,” the notification said.
India is a major importer of Iranian oil but United States and European Union sanctions, meant to discourage Tehran from pursuing its nuclear program, aim to curb Iran’s oil revenues and have made payments for the oil difficult.
Tehran now has to keep New Delhi’s payments in tightly-restricted rupees in an India-based account which can only be used to buy certain goods from India.
New Delhi primarily exports rice, cereals, pharmaceutical products, machine tools, automobile parts and steel to Tehran, all of which are permitted under sanctions. The latest order widens the scope of potential exports.
The increase in exports could make India a net exporter to Iran, which used to be its second-largest supplier of crude at a cost of over $12bn a year before sanctions came in place.
“The move will benefit Indian exports and we can look forward for sizeable growth in India’s exports to Iran in the current fiscal,” M Rafeeque Ahmed, president of the Federation of Indian Export Organizations (FIEO), said in a statement.
Ajai Sahai, FIEO’s chief executive, said the incentives could double exports to Iran to $6bn in 2013- 2014 from a year earlier.
India’s move comes within a week of the United States renewing six-month waivers on sanctions for India, China and seven other economies in exchange for their agreement to reduce purchases of oil from Iran.
India shipped in about 266,000 barrels per day (bpd) of oil from Iran in the contract year ending March 31, 2013, down 26.5 percent from a year ago.