NEW DELHI: As the United States turns the screws on Iran with more and more sanctions, it has made life difficult for a 36-year-old India-Iranian shipping line started by Indira Gandhi with the Shah of Iran, forcing the Indian government to explore ways to cut its losses.
Recently, the Ministry of Shipping wrote to the Ministry of External Affairs (MEA) to survey the possibility of divesting its equity in the Irano Hind Shipping Company, in which Shipping Corporation of India (SCI) has a 49 per cent stake. “About a month ago, we did write to the MEA to seek advice on this,” a senior shipping ministry official told The Sunday Standard. But, MEA is still considering all the possible permutations before giving its suggestion, with the US sanctions having constricted India’s various options.
“This (Irano Hind) was never a pure commercial venture, rather it has been a symbol of Indo-Iranian friendship,” said a senior government official. It was formed in 1975 after Prime Minister Indira Gandhi’s visit to Iran, mainly to ship iron ore from India’s Kudremukh mines. It was also the first-ever joint venture co-promoted by the state-run SCI. Therefore, taking a decision on divestment to cut losses will have to be a politically sensitive one—taken at the highest levels of the government.
“The problem is even if we want to divest, we are not yet able to find a way, as the majority company has no money to buy our stake,” he said.
India has traditionally refused to recognise any unilateral sanctions imposed by any country, except under the umbrella of the United Nations. In fact, in the drawing rooms of Washington, a certain impression has been created that New Delhi is the spoiler in economically isolating Tehran.
Ties with Iran is also a domestic political hot potato, which will also have to be taken into calculation on any decision.
While Iranian oil imports have proportionally come down—though not fast enough for the West—India is also looking at sanctions as an opportunity to increase exports. But there is no such silver lining for the Indo-Iranian shipping company.
“The pressure and sanctions are really making it difficult for the Irano Hind to operate,” said a senior SCI official. The Irano Hind shipping line had been in the cross-hair of US sanctions since 2008, as its 51 per cent majority stake owner, Islamic Republic of Iran Shipping Lines (IRISL) has been accused of providing services to Iran’s Ministry of Defence and Armed Forces Logistics.
In September 2009, the US treasury department for the first time designated Irano Hind, and it was also mentioned in an UNSC resolution in 2010 which imposed further sanctions on Iran over concerns of its nuclear programme.
The sanctions imposed last year in December, however, has been the most debilitating one so far. On December 20, US designated Malta-based 10 subsidiaries of Irano Hind and IRISL, as well as the chief executive of Irano Hind, Jamshid Khalili, for their “involvement in Iran’s efforts to advance its missile programmes and transport military cargoes”.
It has affected the company’s operations as charter hires, as deals are done in euros and dollars, prohibited due to the sanctions. Then, insurance companies are not able to give the requisite insurance covers due to the same reason. Last year, the company gave its dividend in United Arab Emirates dirhams.
In better days, the company had also given order to a South Korean ship builder for an eighth carrier to join its fleet, named Taj Mahal. “That order is stalled, as the payments are not being sent to the ship builder,” said a senior official.