India has invested heavily in Chahbahar Port, which has strategic importance for New Delhi

NEW DELHI: Iran has claimed that it has a balanced foreign policy approach vis-a-vis both China and India, clarifying that it is not favouring Beijing at the cost of Delhi, ahead of the next meet on the proposed bilateral Preferential Trade Agreement (PTA) this week.

The comments were made by the Iranian foreign ministry spokesperson who tried to clear the air about the recent “controversy” over Iran’s growing closeness to China at the cost of India. “#Iran has a longstanding policy of maintaining balanced, friendly relations w/ all Eurasian & E/S Asian powers. Our potential long term cooperation agreements w/ #China & #Russia, & our continued joint work w/ #India in Chabahar prove this.

We are determined to uphold this policy,” the Iranian foreign ministry spokesperson tweeted on This comes amid firefighting by India and Iran over the past two weeks over Delhi’s participation in the proposed Chabahar-Zahedan railway project.

Last Monday, Iranian deputy minister and head of Iranian railways Saeed Rasouli, met Indian Ambassador in Tehran to discuss the issue. India's problem with Iran was its insistence to give the Chahbahar-Zahedan railway contract to Khatam al-Anbiya, a Revolutionary Guard entity, under US secondary sanctions. However, both sides remain committed to the Chabahar Port project.

Interestingly, the comments by spokesperson were made after foreign minister Javad Zarif visited Moscow where he met his Russian counterpart Sergey Lavrov and other top leaders. Iran is India’s gateway to not only Afghanistan and Central Asia via Chabahar Port but also Eurasia and Russia via the International North South Transportation Corridor (INSTC).

Iran and Russia are extending their friendship agreement for another two decades. But Iran’s $400-billion pact with Beijing, which is being negotiated, has generated both anxiety and interest within Iran with sections of the local media warning against a “sellout” to China.

India and Iran will hold their second round of talks this week on PTA as the two sides are exploring to expand their trade basket to include manufacturing, services and light engineering items, ET has gathered.

Several rounds of talks have been held on PTA and based on the outcome of the previous round of talks this February the two sides exchanged the lists of commodity items. The next meeting will be held by July-end, ET has learnt.

India-Iran bilateral trade during the fiscal year 2018-19 was $17.03 b as compared to $13.76 billion in 2017-18, an increase of 23.8%. During 2018-19, Indian exports increased by 32.3% and accounted for $3.5 b, whereas, imports from Iran increased by 21.8% and amounted to $13.5 b.

Major Indian exports to Iran include rice, tea, iron, organic chemicals, insecticides, fabrics, man-made staple fibres, electrical machinery and parts thereof, drugs/pharmaceuticals & fine chemicals, paper and paperboard, etc. Major Indian imports from Iran include crude oil, inorganic/organic chemicals, fertilisers, plastic and articles, edible fruit and nuts, glass and glassware, natural or cultured pearls, precious or semiprecious stones, leather, etc.

Last week, in an interview with English daily ‘The Tehran Times’, Indian envoy to Iran Gaddam Dharmendra said, “We are also neighbours, we are maritime neighbours, and now with Chabahar port as the anchor of the two countries’ trade relations, we have become maritime partners as well.“

“We are grateful that Iran has trusted India with the first phase of developing Shahid Beheshti port in Chabahar,” he said, adding, “Currently, Indian partners are using Iranian facilities in the port but we have placed orders for the necessary equipment from China, Italy, Finland, and Germany and hope that the first delivery will be in October.”

India was the first country that put in place a banking mechanism to facilitate trade with Iran in national currencies. “This rupee-rial channel is being facilitated by the Central Bank of Iran (CBI) and the Reserve Bank of India (RBI). It has helped the traders in both countries in the exchange of commodities. UCO Bank is also the Indian partner in this mechanism and we have a set of six banks on the Iranian side that are designated by the CBI and trade is going on through these banks,” the envoy noted.

The India-Iran bilateral trade during (FY 2019-20) was $4.77 billion, a decrease of 71.99% as compared to $17.03 billion (FY 2018-19) as India stopped importing Iranian crude oil in the backdrop of US sanctions.

During (FY 2019-20), while India’s imports came down to $1.35 billion from $13 billion (90% drop), Indian exports’ also reduced to $3.37 billion from $3.5 billion, a year before.

Major exports to Iran include rice, tea, sugar, soya, medicines/pharmaceuticals, man-made staple fibres, electrical machinery and parts thereof.

Major imports from Iran include inorganic/organic chemicals, fertilizers, cement clinkers, fruits and nuts, leather, etc.