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SAIL to Ink Pact with Iran
Apr 24, 2014

With the Western nations easing sanctions on Iran, the country’s biggest steel maker SAIL is all set to sign a definitive agreement to supply steel worth nearly Rs. 15,000 crore to help Iran set up a railway network project spanning over 15,000 km. to connect its major ports and key production centres.

Iran had sought Indian investment in massively expanding its railway network and needs about 3 million tons of steel rails to connect all major cities, industrial centres and also ports for faster evacuation of goods.

Last year, the USA had eased sanctions on Iran, which has enabled Indian companies to explore investment options. The commerce ministry officials had in December last year, met the top brass of SAIL, BHEL and railway infrastructure builder IRCON to consider investing in Iran. The STC has been entrusted with inking definitive agreements with its Iranian counterpart to pave the way for Indian steel exports there.

SAIL’s Bhilai steel plant is the sole supplier of the country’s longest rail tracks of 260 metres. With an annual production capacity of 3.15 MT of saleable steel, the plant also specialises in other products such as wire rods and merchant products.

Indian exporters are banking on the UCO Bank to help implement the rupee payment mechanism. The easing of the payment mechanism has helped propel Indian exports to Iran to over $ 550 million which is around eight times the exports few years ago.

UCO Bank, in 2012, began handling payments for India-Iran trade, under which domestic oil refiners buy oil from Iran but make payments into an Iran Account with UCO Bank’s Mumbai branch. When Iranians import goods from India, the bank pays the Indian exporters out of this account.

India-Iran trade is expected to cross the $20-billion mark in financial year 2014, up from $15 billion in 2013. India’s exports to Iran include rice, metals, machinery and instruments, primary and semi-finished iron and steel, drugs and pharmaceuticals, processed minerals, manmade yarn and fabrics, tea and rubber manufactured items. Imports from Iran include crude oil, urea, petroleum products, saffron and dry fruits.

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