India should treat Iran’s decision to accept rupee payment for the oil it imports from there as a godsend. It will help tide over the current account deficit problem India faces, at least partially. India imports $10 billion worth of oil from Iran, against which it exports goods worth only a fraction of the amount. It is a golden opportunity for India to sell food grains, raw materials and finished goods to Iran. The Indian government has done well to permit Indian business houses to import goods from other nations for export to Iran, provided they are able to add at least 15 per cent extra value to the goods.
The reason for Iran’s liberal attitude is not far to seek.Years of economic sanctions have had a crushing effect on its economy, though former president Mahmoud Ahmadinejad never admitted it in public. Early this week, Iran’s president-elect Hassan Rowhani had no inhibitions in admitting that the inflation rate, officially listed as 32 per cent, was actually 42 per cent. Recently Iran’s central bank quietly cut the official value of the rial in half, so that a dollar now buys 24,500 rials, up from 12,260. These are the compulsions that forced Iran to accept rupee payments. India’s traditional and cordial relations with Iran must certainly have helped Tehran to take the decision.
Ever since Western countries have been pressuring Iran to halt its nuclear plans and imposing sanctions on Tehran, India has been reducing its purchase of Iranian oil. Even so, the quantity it imports from there is quite substantial. Nearly four decades have passed since the Shah of Iran was overthrown and power passed into the hands of the Ayatollah but the country is still dependent on imports to meet most of its needs of industrial goods. India could have met many of Iran’s needs but by being complacent, it allowed China to steal a march on it. Indian industry should make use of the present opportunity to strengthen India’s business relations with Iran, which will be mutually beneficial.