16 MAY 2016

Ø  With less than a week to go for Prime Minister Narendra Modi’s visit to Teheran on May 22, officials are working hard to seal an agreement to repay $6.5 billion owed to Iran over the years when it was under sanctions. The effort has run into a brick wall over the reluctance of European banks to process the payments, officials in the Oil and External Affairs ministries have told The Hindu. “We are trying our best to conclude the agreement during the week,” an official said, adding “We would have liked to transfer at least some part of our outstanding dues to Iran, before the PM’s historic visit.” The repayment agreement is among a slew of announcements India and Iran hope to make during Mr Modi’s first visit to Teheran on May 22-23.

Ø  In its effort to have a full fledged multi-layer Ballistic Missile Defence system, India on Sunday, successfully test-fired its indigenously developed supersonic interceptor missile, capable of destroying any incoming hostile ballistic missile, from a test range off Odisha coast. “The test conducted to validate various parameters of the interceptor in flight mode has been successful,” Defence Research Development Organisation sources said. The interceptor was engaged against a target which was a naval version of Prithvi missile launched from a ship anchored inside Bay of Bengal, taking up the trajectory of a hostile ballistic missile. The target missile was launched at about 11.15 hours and the interceptor, Advanced Air Defence (AAD) missile positioned at Abdul Kalam island (Wheeler Island) getting signals from tracking radars, roared through its trajectory to destroy the incoming hostile missile in mid-air, in an endo-atmospheric altitude, the sources said.

Ø  Other announcements include the signing of a trilateral trade agreement, which includes Afghanistan, that has already been finalised, an MoU for the development of Chabahar port, progress on Indian exploration of the ‘Farzad-B’ gas oilfields. While the other agreements are on track, officials say it is the hunt for the repayment channel to Iran that is keeping them on tenterhooks, despite several banks including the Danske bank of Denmark, Europaeisch-Iranische Handelsbank (EIH) of Germany, Central Bank of Italy and Halkbank of Turkey having been identified to carry out the transactions, and the RBI has identified corresponding banks in India. New Delhi has repeatedly said it is keen to pay back Iran the $6.5 billion, most of it for oil transactions. Though the U.S. lifted ‘secondary sanctions’ in January 2016, effectively allowing Europeans banks to carry out transactions with Iran, India has been unable to find larger banks willing to channel the amount to Iran. “Given the size of the repayment, they (European banks) should be chasing us, not the other way around,” a senior official said. Finally, say officials, the possibility of Donald Trump, or a Republican candidate winning the U.S. Presidential elections later this year is another dampener, as their campaigns have promised to scrap the nuclear deal with Iran hammered out last year, possibly revising the lifting of sanctions. On Friday, a group of nine international banks including HSBC and Standard Chartered met with U.S. Secretary of State John Kerry in London, and refused to consider dealing with Iran until the Washington opens up for business after decades of sanctions on Iran. At the same time last week, a team led by U.S. Deputy Assistant Secretary for Counter Threat Finance and Sanctions Andrew Keller met with officials in Delhi and Mumbai, including representatives of ONGC, Tatas, Hindujas, Essar Oil and Reserve Bank officials. Confirming that the team had been invited by the government to “clarify their doubts” on moving ahead with Iran, officials told The Hindu that India is pushing for the U.S. to convince U.K. banks to allow the deal for $6.5 billion to be processed as a “one-off” transaction, even as they work on finding more permanent channels of doing business with Iran. “It is ironic that four years ago, it was U.S. pressure that made us slash oil imports from Iran, and now it is the U.S. that has to ensure that we can do business with Iran,” a senior official said.

Ø  The government has admitted that the amended Foreign Contribution Regulation Act (FCRA), 2010, brought in through the Finance Bill route, will not only help foreign-origin companies fund NGOs here but has also cleared the way for them to give “donations to political parties”. Union Minister of State for Home Kiren Rijiju told The Hindu that the amendment, cleared by the Lok Sabha in the Budget session, would ensure that “donations made by such [foreign shareholding] companies to entities including parties will not attract provisions of the Act.

Ø  To take forward the ambitious Mumbai-Ahmedabad high speed rail project announced by the government in December last year in partnership with Japan, a high-level Indian delegation led by Niti Aayog vice-chairman Arvind Panagariya and Foreign Secretary S. Jaishankar will attend a joint committee meeting on the project in Tokyo on Monday.