India must start talks on PTA with Iran: Assocham

Lifting of the US-led international sanctions on Iran presents an opportune time for India to start negotiations on inking a preferential trade pact with the West Asian nation, which can fill up the demand gap for Indian exporters in many other economies, Assocham has said.
"Lifting of international sanctions on Iran provides an opportune time to start dialogue on India-Iran preferential trade agreement. This should encompass trade, investment and services.
"A preferential trade agreement with Iran will help India expand the volume of exports to Iran, particularly of pharmaceuticals, iron, steel and auto components. Also, Iran could serve as an outlet for Indian goods to countries in central Asia and Afghanistan," the chamber stated.

Unlike Pakistan, which has a shallow Preferential Trade pact with Iran, India can seize a new opportunity by easing of sanctions by the western nations and sign a trade opening pact with the key West Asian nation.
Iran has preferential trade agreements with Pakistan with focus on a very few commodities and offering margin of preference on customs duties.
The analysis by the industry body reveals that the PTA with Pakistan is shallow and has not resulted in strengthening of trade relations between them. In fact, the total trade turnover between Iran and Pakistan has shrunk.

According to the paper, besides the Iran-Pakistan PTA being shallow, the timing was also not right in the wake of full blown sanctions squeezing the best of the Iranian economy which was being punished for its controversial nuclear programme.

Pakistan-Iran trade started declining gradually from the level of USD 1,321.3 million in 2008-09 to a mere USD 218 million in 2013-14. Pakistan's exports to Iran in 2013-14 declined to USD 53 million from USD 97.7 million in 2012-13, the study found.
"With the rest of the world facing a severe demand slowdown, Indian exporters can leverage the Iranian consumer sentiment which has been pent up for the last several years.
"As Iran and the US work out the finer details of lifting of sanctions, India should enhance its engagement with Iran and be ready for the opportunity which is set to arise in the near future," said Assocham Secretary General D S Rawat.

Iran's trade with India in 2014-15 totalled around USD 13 billion. In 2011-12, before sanctions hit, it was more than USD 16 billion - a measure of the ground that may be recovered, the chamber said.