Steel Authority of India (SAIL) has cut its price of rail tracks meant for Iran Railways (IRIR) after Tehran threatened to walk out of the contract, Indian media reported on Saturday.
SAIL Ltd along with Jindal Steel and Power Ltd are to export rail tracks to Iran in a contract worth $233 million which was signed last October.
Iran had asked India’s State Trading Corp (STC) to get discounts after being offered by Turkey and countries in Europe to supply the equipment at cheaper costs.
SAIL, India’s largest steel producer, relented after an Iranian delegation visited the country earlier this month to seek concessions and threatened to snap the contract.
SAIL could not hold the ground after initial reluctance to renegotiate the contract, slashing the price by 7.3% to $217 million, Indian media reported.
New Delhi had sent Trade Secretary Rajeev Kher to persuade Tehran to stick to the original terms, but he came back “empty handed”, Indian sources said.
The Iranians said they could get the equipment at a cheaper price since the euro had depreciated more than 20% against the US dollar in the last six months and steel prices had fallen significantly in the market.
The Indians have reportedly taken note of the specter of competition from other suppliers looming large.
India’s Financial Express said Jindal Steel and Power, with which Iran has signed a similar contract, has also indicated its desire to renegotiate it.
Iran wants to splurge up to $8 billion over the next six years to revamp and expand its railway network, Minister of Industry, Mine and Trade Mohammad Reza Netmatzadeh said last week.
India is a major trade partner of Iran but the country has used US-led sanctions to twist Tehran’s arm in their bilateral trade.
The National Iranian Oil Company has reportedly withdrawn some of its discounts and free shipping it had been offering Indian refiners on crude sales.
Iran has also scrapped an offer to the Indians to develop the Farzad B gas field on the exceptional term of production sharing after they dragged their feet, citing US-led sanctions.
Earlier this month, Government spokesman Mohammad Baqer Nobakht said India owes Iran $8.8 billion which is blocked in a bank account under the sanctions regime.