NEW DELHI: Three Indian companies Essar Steel, Tata Steel and RPG will invest $ 5 billion in Iran in the steel and power sector. While Essar and Tata will set up steel industries in Iran, the RPG group will set up a major power transmission project.

"Essar and Tata may soon be finalizing plans for multimillion dollar steel plants at Bandar Abbas, while RPG Group is undertaking a mega power transmission and distribution project in Iran," Indian ambassador in Iran K.C. Singh said.

"Essar, which has taken a lead, is expected to take $120 million credit line while RPG and Tata would follow soon with the investments expected to exceed the $200 million credit line offered by Indian government," said Singh.

Indian investments in Iran is a result of availability of cheaper and exhaustive energy resources, easy link to markets in Europe and Central Asia and the planned East Corridor to Afghanistan, said Iranian Ambassador to India Zargar Yaghoubi.

"These investment proposals include $3.3 billion worth projects in steel and mining, of which $1.8 billion have almost been finalized," the official said.