India has signed a contract worth $233 million with Iran for exports of rail tracks by companies including Steel Authority of India.
Officials in Tehran announced on Saturday that India will finance exporting about 150,000 tons of standard rail tracks to Iran.
Saeed Mohammadzadeh, the deputy director for technical and infrastructure affairs of Iran Railways (IRIR), told the local media that India has created a special mechanism to support exports of rail tracks to Iran through the “full finance” scheme.
Mohammadzadeh added that Iran will not pay anything for the imports of the tracks.
Last year, India signed a contract worth $233 million with Iran for exports of rail tracks by companies including Steel Authority of India (SAIL).
Based on the original contract, the Indian companies would provide Iran with enough standard rail tracks to set up a network project spanning over 15,000 kilometers.
It is still not clear if the finance mechanism that Mohammadzadeh has mentioned involves the deal with the SAIL-led group.
Officials in Tehran have already emphasized that Iran wants to spend up to $8 billion over the next six years to revamp and expand its railway network.
They have also emphasized that the country will need about 3 million tons of steel rails to connect all major cities, industrial centers and also ports for faster evacuation of goods.
Analysts are already speculating that the Indian government may reimburse steel exports to Iran through Iran’s assets that have been frozen in New Delhi banks as the result of the US-led sanctions against the country.
Indian media had previously reported that Indian exporters are banking on the United Commercial Bank or the UCO Bank to settle rupee payments with Iran.
Reports last April said UCO Bank began handling payments for India-Iran trade in 2012, under which domestic oil refiners buy oil from Iran but make payments into an ‘Iran Account’ with UCO’s Mumbai branch. When Iranians import goods from India, the bank pays the Indian exporters out of this account.