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The government is mulling a new strategy to boost trade with Iran, with a special focus on increasing the movement of cargo by way of increasing the number of shipping lines, including the cost of insurance coverage.
A committee, headed by Commerce Secretary S R Rao, is meeting on Tuesday to review these issues. It will seek to work out a mechanism so that more and more Indian ships that are insured locally within the country, are used for sending and bringing in shipments into the Islamic nation and vice-versa, commerce department officials told Business Standard. This would be the first meeting of the committee.
Officials said that Indian exporters were relying heavily on global shipping lines, as a result of which they were bearing huge costs due to ongoing Western sanctions on trading with Iran to restrain its nuclear proliferation programme even though Iran had maintained that it was for peaceful purposes and not warfare.
“The problem is Indian shipping lines are not getting insurance and re-insurance. And using global shipping lines is proving to be very expensive for exporters. So, we have asked the shipping ministry to increase the number of vessels,” a senior commerce department official said.
The plan is to use the ship that carries exported items from India to bring shipments from Iran. Out of the total 1,150 vessels that India has, a mere seven-eight per cent are used on the India-Iran-India route. The number has been steadily decreasing since the sanctions were put in place.
During their visit here last week, an Iranian delegation led by the deputy governor of the Central Bank of Iran for Foreign Exchange, Gholam Ali Kamyab, raised concern on insurance and re-insurance of shipping lines as a major hurdle for trade with India.
Apparently, foreign banks have been “threatening” the public sector general insurance firms that they will close their accounts for providing insurance cover to ships ferrying oil from Iran.
“We are facing a major problem of transport, including cost of transport, due to lack of shipping facility,” said Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO), adding that exports to Iran might reach $6 billion in this financial year.
Last month, minister of state for finance Namo Narain Meena admitted to the fact that the New India Assurance Co was once threatened by a foreign bank.
The Insurance Regulatory and Development Authority (Irda) had informed the government that following the restrictions imposed by US and EU, Europe-based insurers had stopped providing cover to ship owners involved in oil consignments from Iran-India-Iran and vice-versa.
The committee will have representatives from the shipping ministry, department of financial services and department of economic affairs under the finance ministry, public sector general insurance firms and Planning Commission among others.
