Iran Khodro signed the deal with Oman’s government and private sector, and the two sides are accordingly committed to establish a company with trilateral joint investment.
The Omani sides will fund 80 percent of the total investment, and Iran Khodro Company (IKCO) will fund the rest.
Iran Khodro’s 20-percent share will be non-cash investment in the form of technical and engineering services as well as the production technology for manufacturing the Iranian-made cars IKCO Runna and IKCO Dena.
The production lines will be launched in the Duqm Free Zone, a port town in central-eastern Oman.
The cars manufactured in this factory will be assembled using the semi-knock-down (SKD) kits sent from Iran. The kits contain the parts needed to assemble the cars.
The factory is scheduled to be developed in future and turn into a regional hub for Iran Khodro’s productions throughout the Persian Gulf and Northern Africa regions.
The deal was signed against the backdrop of a new wave of interest in ties with Iran after the country and six world powers on July 14, 2015 reached a conclusion over the text of a comprehensive deal on Tehran's nuclear program and implemented the agreement on January 16.
The agreement between Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany) terminated all the sanctions that had been imposed on Iran over its nuclear energy program.
Experts believe that Iran's economic growth would rise remarkably now that the nuclear deal has come into force.
Iran’s automotive industry is the second largest in the country after its oil and gas industry, accounting for 10% of the country's GDP.