In a major shift, India lets businesses invest in Iran in rupees

New Delhi: India is allowing its businesses to invest in Indian rupees in Iran, in a major departure from rules that allow Indian investors to open businesses abroad only in foreign currency, a person familiar with the development said.

So far permission to invest in rupees has only been given to Indian businessmen investing in Nepal and Bhutan, the person said, adding that an exception had been made in the case of Iran because the West Asian country has had restrictions imposed on it, barring it from dealing in dollars and euros, over its nuclear programme.

This permission was granted last month, the person cited above said.

Meanwhile, Iran’s President Hassan Rouhani arrived in India on a three-day visit on Thursday. He landed in Hyderabad airport where he was received by R.K. Singh, Union minister of state for power, and other senior officials.

Rouhani’s visit is his first since assuming office in 2013 and comes a decade after the last presidential visit from Iran —Mahmoud Ahmadinejad in 2008.

Connectivity and energy are seen as key items on the agenda for discussions between Rouhani and his Indian hosts —Prime Minister Narendra Modi and President Ram Nath Kovind. Modi will be hosting a lunch for Rouhani on Saturday while Kovind will host a banquet for him, a second person familiar with the development said.

India is trying to develop the port of Chabahar on Iran’s east coast as a way to gain access to the markets of Central Asia as well as Afghanistan by bypassing Pakistan. The port is about 72km from the Pakistani port of Gwadar, which China is developing.

In Hyderabad, Rouhani interacted with a gathering of about 300 Muslim intellectuals, scholars and Sunni and Shia community clerics from the city. Though details or the subject of discussion were not revealed, an official, who asked not to be identified, said that discussions could have included Sunni-Shia relations. Rouhani will also meet members of the Shia community who have settled in Hyderabad on Friday.

More importantly, Rouhani will offer Friday prayers at the historic Mecca Masjid, a mosque built with Persian influence or architecture, before addressing the congregation.

The proposal to develop Chahbahar was mooted in 2003 but has gathered pace only in the past three or four years — especially following the roll back of some of the sanctions on Iran after the Shia-majority country signed a deal with the international community to freeze its civil nuclear programme in 2015.

With US President Donald Trump threatening to pull out of the deal, the project could be dogged by uncertainty again. But Indian analysts said India is likely to go ahead with the project given Trump’s own emphasis on India’s role to stabilise Afghanistan economically.

Previously, India had said its firms could spend as much as $20 billion on not just the port but also petrochemical plants, railway lines and other industries in the area. But progress has only been made on the port so far with India shipping consignments of wheat bound for Afghanistan through Chahbahar. The plan is for India to equip and operate two berths in the port with a capital investment of $85.21 million on a 10-year lease, an Indian official said.

Rouhani’s visit comes amid the emergence of new fault lines in the Gulf region with Saudi Arabia, the United Arab Emirates (UAE) and others like Bahrain and Kuwait seen ranged against Iran—along with traditional foe Israel.

For India, Israel is a key partner in its counter-terrorism initiatives as well as its efforts to attract innovation and sophisticated technology to boost manufacturing.

Countries such as Saudi Arabia and the UAE are crucial sources of energy for India and also host a number of expatriate Indians. India was the guest country at Saudi Arabia’s Al Janadriyah Festival last week and Modi was the key speaker at the World Government Summit hosted by the UAE over the weekend.

The two-day visit to Hyderabad, which is believed to have a Muslim population of about 3 million, is significant to the city which has a huge population of Shia Muslims. The street where the Consulate General of the Islamic Republic of Iran is situated at Banjara Hills, was named as the Imam Khomeini Road after former supreme leader Ayatollah Khomeini.livemint