New Delhi
Connectivity and energy security will be key pillars during the tour of Iranian President Hassan Rouhani, who arrived in Hyderabad this afternoon on his first official visit to India after taking charge in 2013.

Mahmoud Ahmadinejad was the last Iranian President who came to India in 2008. During Prime Minister Narendra Modi’s visit to Tehran in 2016, a landmark trilateral transit agreement was entered into by Afghanistan, Iran and India.

Sources say amid rising tensions with the US and possibility of western sanctions, Iran is now accepting Indian rupees for investments in the country, something allowed so far only by Bhutan and Nepal. Indian businessmen trade in foreign exchange for overseas investments.

In the last financial year, the India-Iranian bilateral trade stood at nearly $13 billion with more than $10 billion accounting for Indian imports of mainly crude oil. “The absence of banking and payment channels has been a challenge in commercial transactions with Iran, but efforts have been made to address these issues over the last few years,” said a government official privy to discussions. The two sides are also now looking at options of opening banking channels in each other’s countries.

The larger objective is for India to insulate non-oil trade from possible adverse impact of any sanctions in future on Iran, like the oil money that now gets paid through Eurozone banking arrangements.

In official meetings on Saturday, the two sides will also discuss handing over of operations from Iranians to Indians of two berths at Chabahar port that are being equipped and developed by India. Two thousand containers of wheat have already been shipped to Afghanistan through the port, seen as Delhi’s alternate to strategic Gwadar port in Pakistan, being developed by China. However, talks are dragging slowly on India developing Iranian Farzad-B gas field.