The facility, which could be availed by any of the seven Iranian banks -- Bank Mellat, Bank Melli Iran, Bank Sepah, Bank Sedarat Iran, Bank Tejarat, Bank of Industry and Mine and Export Development Bank -- has a credit period of up to eight years, a bank release said in New Delhi on Tuesday.

This comes at a time when India is hard pressed to attain a magical share of one per cent in world trade.

"India's exports to Iran are expected to receive a quantum jump with the establishment of this $200 million medium-term LoC to Iran," Exim Bank said in the release.

India's exports to Iran rose by 13.5 per cent to $252 million in 2001-02 from $222 million in the previous fiscal.

Major export items included drugs and pharmaceuticals, organic and inorganic and agro chemicals, iron ore and primary and semi-finished iron and steel, meat and preparations, paints and enamels, manmade yarn and fabrics, rice, processed minerals, tea and auto and bicycle parts.

It said a number of Indian companies were engaged in negotiations with their Iranian counterparts for export of equipment and technology to Iran in the sectors like power, railways, port, hydrocarbons, automobiles, cement and pharma.

"Prospects of setting up joint ventures in Iran in the areas of petrochemicals and pharmaceuticals, are also quite promising," the Exim bank said.

The $200 million LoC was signed by Exim Bank's CEO T C Venkat Subramanian and the representatives of seven banks in Iran, in the presence of Prime Minister Atal Bihari Vajpayee and Iranian President H S M Khatami on January 25 in New Delhi.

Under the agreement, Iranian importers would make advance payment of 15 per cent of contract value and credit would be provided by Exim Bank for 85 per cent of the contract value to the concerned Iranian bank.

Iran's gross domestic product is estimated to have grown by 5 per cent in 2002 and the country had foreign exchange reserves of $17.47 billion in 2001, representing over 11 months of import cover.

Highlighting the hydrocarbon resource base of Iran, the bank said it included 90-95 billion barrels of crude oil, which was around 10 per cent of the world's known oil reserves and 17 trillion cubic metre of gas. "Iran is one of the major sources for India for import of crude oil," the bank said.