Iranian President Seyed Mohammad Khatami on Monday emphasised that his country's foreign policy was focused on broadening cooperation with Asian countries among whom, "India occupies a distinguished place."

Addressing a business session organised in his honour by the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry, he pointed out that Iran was delighted by India's "gigantic strides" in sustaining national development, and a thriving economy especially in the field of information and communication technology.

While Iran has the potential to become a flourishing market for Indian IT goods, Khatami pointed out that his country itself has a huge bank of young and creative talent and a large number of extremely active and efficient companies and institutions are already functioning there.

Underlining that information technology was considered a great source of power, he, however, expressed concern that its distribution (as a source of power worldwide) was uneven.

"Therefore, we must at least do our best to prevent any further widening of the gap at the international level. Through their close cooperation, countries like India and Iran can be quite effective in narrowing down the existing gap of digital rift in the modern world," President Khatami said.

He said the potential of the two countries for broadening economic relations was higher than the current volume of trade, which had risen from $120 in 1991 to $500 million in 2002.

He emphasised that Iran had made "striking achievements" in agriculture, industry, science and engineering in the last two decades.

The economy of Iran has now reached such a level of development and stability that price fluctuations in oil, Iran's principal source of foreign exchange, does not affect the nation drastically, Khatami pointed out.

He stressed that Iran's easy access to Central Asia and Europe coupled with the conclusion of the transit agreement on the North-South Corridor by India, Russia and Iran has given an impetus to the existing opportunities for the implementation of common projects and investment by the two countries, Khatami said.

While inviting Indian companies to invest in Iran's oil and gas sector, Khatami said that Iran had nearly 9 per cent of the world's oil reserves and 15 per cent of the known gas reserves, adding India was one of its "best customers."

He underscored that piped gas from Iran to India, can be implemented, once the final decision is taken.

He pointed out that the Indo-Iranian reconstruction efforts in Afghanistan provided a good opportunity to their investors, industrialists and employers to exchange information and cooperation for the implementation of developmental projects that country.

Referring to the vast tourism potential that existed between India and Iran, he said new measures have been taken for the Tehran-New Delhi and Tehran-Mumbai air routes.

President Khatami, however, warned that cooperation between India and Iran, could face obstacles and hindrances, but assured that they could be removed through "dialogues, reviews and negotiations."