Iran-India banking mechanism ready for business    

TEHRAN: India and Iran are set to begin banking transactions in the coming days as New Delhi has agreed to grant tax exemption to banks trading with Tehran, according to Indian Ambassador to Iran Saurab Kumar.

Kumar  and Governor of Central Bank of Iran Abdolnaser Hemmati met on Monday and announced after talks that the banking transactions mechanism between the two countries is ready for operation.

He said that both sides will do business in coming days based on the exemption of Indian side’s payments for Iran oil from taxes, news agency IRNA reported.

The two countries on November 2 had signed a bilateral agreement to settle oil trades through an Indian government-owned bank, UCO Bank, in the Indian currency, which is not freely traded on international markets.

However, the income of a foreign company that is deposited in an Indian bank account is subject to a withholding tax of 40 per cent plus other levies. That made the agreement unworkable for Iran, reports said and led to the freeze in payments by the refiners until the exemption could be introduced.

Both also discussed the two countries’ trade relations and operationalising investment in Chabahar.

In 2016, India entered into a trilateral treaty with Iran and Afghanistan to develop a new transportation corridor connecting the three countries and other Central Asian Countries via the Chabahar Port. Chabahar provides India with an easier land-sea route to Afghanistan.

In November 2017, India sent its first cargo of wheat to Afghanistan through Chabahar in what appeared to be a run dry of a multi-modal connectivity route.

The cargo was shipped from India’s western port of Kandla, unloaded at Chabahar and eventually taken to Afghanistan’s Nimroz province by trucks. (AGENCIES)