India subsidizes more trade with Islamic Rep.
The India government, trying to get more Indian firms to sell to Iran, has decided that exports to Iran in Indian rupees will be entitled to subsidies normally only given to exporters who bring hard currencies to India.
Officials did not explain why they felt such sales warranted the subsidy.
Indian exporters mainly trade in freely convertible currencies, including the US dollar and euro. The government provides export incentives to exporters earning their revenues in such currencies.
Iran used to buy Indian goods--but only small quantities of them--in hard currencies.
When sanctions hit, Iran agreed to accept 45 percent of the payments for its oil in rupees, a non-convertible currency that is useless outside India and that began stacking up in Iranian accounts in India. Iran has been trying to find more Indian products it can use in order to get rid of those rupees.
To increase bilateral trade, the Indian government in April also waived the value-added standards for exporters shipping imported items like food and pharmaceuticals to Iran. In other words, Indian traders can just act as middlemen for Iran and don't have to add any value to the prod ucts before re-exporting them to Iran.
Besides food products, India mainly exports to Iran pharmaceuticals, machinery, transport equipment, chemicals, manmade yarns and fabrics and steel.
India has steadily cut oil imports from Iran as the sanctions from US and other Western countries blocked payment channels and crippled shipping routes.
India imported 21.20 million tons of crude oil from Iran in 2009-10, which has fallen progressively to 18.50 million tons in 2010-11, 18.11 million tons in 2011-12 and just 13.14 million tons in 2012-13, a total decline of 38 percent.
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|Title Annotation:||Economy: Money and its impact|
|Publication:||Iran Times International (Washington, DC)|
|Date:||Aug 15, 2014|
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