Commerce ministry wants more Indian ships for trade with Iran

The commerce ministry has urged the shipping ministry to increase the number of Indian ships plying between the country and Iran as a lack of sufficient number of vessels has started affecting trade between the two countries.

With not many Indian shipping companies operating services to Iranian ports, Indian exporters are dependent on global shipping lines for most of their trade with Iran.

These services, however, proved to be unreliable and expensive with the sanctions regime raising insurance cost of both freight and shipping services.

''Since Indian ships are insured locally and are not dependent on insurance and re-insurance from western companies, these are not affected by economic sanctions by the US and the EU, like the global shipping lines,'' commerce ministry sources said.

While Iran continues to be an important market for Indian goods and a major source of crude petroleum, only eight per cent of the country's total fleet of 1,150 vessels are available for trade with that country, the commerce ministry pointed out.

Since the two countries use a rupee-trading account to make payments for oil and other merchandise in order to bypass global banking restrictions, the scope of increasing bilateral trade is also great, according to the commerce ministry.

India continues to import Iranian crude oil using exemptions from the US sanctions, but had to back out of a multi-billion-dollar natural gas pipeline project with Iran due to US sanctions.

In fact, export of Indian goods to Iran jumped 40 per cent to $3.6 billion last fiscal and has been on the rise in the current year as well, after the western countries stopped trading with it following imposition of economic sanctions.

''We are seriously constrained because of logistical problems. Right now, global shipping charges are soft, but it could harden at the slightest developments overseas,'' the official said.

An Iranian delegation led by central bank vice-governor Gholamali Kamyab was in India earlier this week to identify concerns on insurance and re-insurance of shipping lines as a primary impediment for trade.

While tensions between Iran and the West have eased following last month's announcement of an agreement with the US over Iran's nuclear programme, this is yet to be reflected in easing of curbs on trading.