Distinguished members of Iranian and Indian Industry, 

Ladies and Gentlemen,

 I value this opportunity today for an interaction with leaders of Iranian and Indian industry.  The presence of a distinguished business delegation which has come from India and the participation of many senior Iranian businessmen augurs well.  It indicates the complimentarity which exists between the two economies.  It also suggests a mutual recognition of the potential and new opportunities to strengthen economic and commercial links.

Indo-Iranian commercial relations are embedded in history.  Indian spices, precious stones were valued in Iran for centuries.  Similarly, Persian rose water and dry fruits were greatly sought after in India. In fact, I understand that Seiraf, Hormoz and some other Persian ports were initially developed to meet the requirements of Indo-Iranian trade. We need to rebuild on these historical links in today’s new context.  There is ample scope to do so.

Both Iran and India are moving ahead to improve the quality of life of their people and seek their rightful place in the global economy.  India for nearly a decade continues to be among the fastest growing economies  in  the  world  with  a GDP growth between 6 – 6.5%.  This coupled with modest inflation, a comfortable level of foreign exchange reserves and policies aimed at fiscal correction, indicates strong and stable macro-fundamentals. 

Coupled with this, the progressive de-regulation of our economy has created new opportunities for private investment.  This is particularly so in the area of infrastructure – Telecom, Roads, Ports, Power and the Energy sector. Our moderate rates of taxes, progressive reforms of financial and capital market makes the large Indian market an attractive destination for foreign investment.  In the recent Budget presented to Parliament at the end of February, the road map for the Second Generation Reforms has been articulated at length. They cover action ranging from fiscal policies, down-sizing of Government, Labour reforms, Tax Policy changes and improved management of our food economy.  We intend to pursue these reforms with earnest and build a consensus across the political parties and with State Governments for an orderly implementation of these wide ranging measures. 

I am conscious that the Islamic Republic of Iran, as part of its Third Economic Development Plan is also striving to transform its economy into a modern, international and competitive enterprise.  Iran’s new focus on development of the country’s non-oil economy and reduced dependence on the oil-based economy offers new areas of co-operation with India. 

Looked at an overall point of view, we should concentrate on five key areas. 

First, the obvious – namely, co-operation in the field of Energy or rather Energy security.  Iran’s large energy reserves of oil and gas and the large Indian market to meet its energy needs is the most obvious area of complimentarity.  We import large quantities of petroleum crude from Iran both by the public and private sector.  This demand would grow.  In addition to this, the Indo-Iran Joint Commission is studying all aspects relating to the Gas Pipeline from Iran to India.  We must pursue these on-going deliberations with speed and vigour. 

On the pipeline issue, we must ensure that the project is cost-effective and secure even while keeping all our options open.  The feasibility study for the off-shore route should be completed expeditiously.  The on-going projects on LNG should be monitored carefully and completed in the stipulated time.  This will enable co-operation in the field of energy to bear early fruit.  It will create a conducive environment and augur well for the more ambitious projects we have in mind. 

The future of Asia would be greatly influenced by the manner in which countries in the region jointly harness their energy reserves to each others mutual advantage.  The Indo-Iranian co-operation in the field of energy can set a shining example in this area.

 Second, co-operation and joint ventures in energy related activities need active encouragement. 

We could think of  projects like :-

• Setting up coastal-based Power Stations 
• Value-added industries based on down-stream hydrocarbons like;
• Petro-chemicals 
• Refineries 
• Fertilizers 
• Ancilliary industry based on the utilization of oil and gas need to be actively pursued.

   For improving mutual access, I also suggest we examine the possibility of a Preferential Trade Agreement between India and Iran.  If for enabling such an arrangement to effectively work, a supporting financial and credit facility becomes necessary, we should be willing to consider and support such mechanisms.  Inadequacy of banking arrangements constitutes a handicap in the furtherance of our economic relations.  I am given to understand that the Tejarat Bank of Iran has applied to the Reserve Bank of India for opening a branch office in India.  Governor, Reserve Bank of India, informs me that this request will be considered and necessary permission would be accorded soon.  We hope that this would be a reciprocal arrangement and would also enable an Indian bank to set up a branch office in Teheran. Such reciprocal banking arrangements would strengthen economic and trade arrangements.  In the same spirit, we are also agreeable to offer a Line of Credit of 200 million dollars to Iran for supporting India’s participation in Iran’s Third Economic Development Plan, particularly supporting infrastructure projects.  The terms and conditions of this credit facility can be worked out to the mutual satisfaction of both Governments.

These arrangements would send a powerful signal of our earnest desire to improve commercial links between the two countries. 

Fourth, we must encourage co-operation in the area of New Economy and in the field of science and technology.   This should cover areas like :-

•  Information Technology
• Telecommunication
• Electronics
• Pharmaceuticals & Bio-Technology
• Co-operative endeavours to utilize India’s large reservoir of Engineers, Scientists, Technicians and skilled personnel.
• Development of Remote Sensing
• Communication Satellite and Launch Vehicles
• Oceanography

Finally, encouraging Joint Ventures and Direct Foreign Investment.  Some of the on-going projects reviewed at the last meeting of the Joint Commission needs an added momentum.  This includes areas like expansion of fertiliser projects, provision of technical services through Indian Consultancy Organisations, investment in Free Trade Zones and enhancing co-operation in Railways and Shipping arrangements. 

Iran has a strategic location to provide access to Central Asia and adjoining regions.  In this context, the international North-South Transport Corridor agreement between India, Iran and Russia and the Tripartite Agreement between India, Iran and Turkmenistan offer unique opportunities for expansion of Indo-Iranian economic and commercial ties.

Both India and Iran are poised to play an important role in the development of Asia.  I hope that the deliberations today would create greater awareness of the new opportunities which exists between the two countries. I also hope that the contact between the business communities of both the countries would enable them to grasp these new opportunities for enabling Indo-Iranian co-operation to realise its full potential.

Thank you