CHENNAI: Even as India’s Rupee-Rial establishment with Iran might dispel initial fears of a huge trade impact in case of probable sanctions by the United States, sanctions against SWIFT transfers to Iran might discourage many Central Asian countries from investing on Indian exports through the Chabahar port.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is used for interbank messages to conduct financial transactions safely, when banks from two or more countries are involved.
“The impact depends on what kind of sanctions the US decides to impose on Iran. If the US disrupts SWIFT, then it will have a huge implication — transactions in foreign exchange might not be possible,” said Ajay Sahai Director General & CEO — The Federation of Indian Export Organisations. “If a sanction against SWIFT is imposed, the movement of cargo through the International North-South Transport Corridor will be difficult because even if you are exporting to Russia or any country in Central Asia, banks will be reluctant to take the goods as they will be transiting through Iran,” Sahai added.
India has invested heavily into Chabahar port in Iran, which India plans to use as a major trade route to Afghanisthan, Central parts of Asia and Eurasia, bypassing another major trade route through Pakistan.
“In case sanctions are imposed on Iran, I think it would be difficult to even attract investment through the Chabahar trade route, because you require investment in hard currency. But I think it is too early to conclude, let us see what kind of sanctions are imposed on Iran,” he added.