Iran talks free trade, basmati imports with India while hosting Commerce Secretary Rajeev Kher

NEW DELHI: Expecting the removal of trade sanctions imposed on it by western nations, Iran has proposed a free trade agreement with India to boost bilateral trade and investment.

The matter came up for discussion during the recent visit of Commerce Secretary, Rajeev Kher to Tehran. He was there for the first meeting of the joint working group (JWG) of the two countries.

"Iran is very keen to enhance its trade relations with India. It wants to increase its share in the global trade and they said that India can play a very major role in fulfilling that ambition," Kher said.

"Iran has proposed to negotiate a preferential trading agreement with us. I told them that India will consider this proposal very positively and will soon respond after taking the appropriate mandate from the government," he added.

Kher said the pact would be beneficial for India as through Iran, it can get market access to some parts of Europe and Africa.

He said he met his Iranian counterpart and members of several industry chambers in Tehran and now the JWG would meet every year as it would institutionalise the framework.

Iran is in the process of reaching an understanding with the six world powers on its contentious nuclear programme, which may ultimately lead to lifting of trade sanctions on the Islamic nation. The move will help Iran to enhance its trade ties with its trading partners including India.

On discussions over basmati rice exports to Iran, Kher said India raised the issue of high import duty, declining imports of the commodity from India and stringent standards.

"We discussed all the issues on basmati rice. Iran has said that they have adopted the Codex plus standard and they expect all their suppliers to comply with them. Indian exporters would have to comply with that. We will see how we can do that," he said.

Codex is an international standard for food trade for safety, quality of products.

Iran, however, assured that it would increase imports of basmati rice from India as "New Delhi is a chosen partner for basmati rice for them", he added.

India's basmati rice exports to that country have declined to $600 million from $1.4 billion annually. Iran has not being issuing fresh import permits since October 2014.

India's overall basmati rice exports declined by over six per cent to 2.57 million tonnes during April-December 2014 as compared to 2.74 million tonnes in the same period last year.

Iran is the largest basmati rice importer, accounting for around 60-65% of total basmati rice exports from India. Basmati rice was India's second largest export commodity after buffalo meat to Iran.