As the world readies to do business with an Iran free of sanctions, one country in particular is watching closely: India.
As a major net importer of oil, India has already benefited from the U.S.-led nuclear deal with Tehran. Oil prices have declined in recent days, driven largely by expectations of more Iranian crude hitting the market. According to India’s Finance Ministry, power-hungry India saves nearly $1 billion in import costs for every dollar drop in global crude prices.
India is particularly well positioned to benefit because many of its refineries are designed to receive Iranian-grade crude, analysts said. On Wednesday, after the agreement was signed, Mumbai’s Sensex closed up 1% on hopes of cheaper fuel. Shares in the Indian Oil Corporation Limited are up 5% since Tuesday.
But it’s not all good news.
Since India refused to fully take part in the U.S. and EU-led sanctions on Tehran, Indian businesses have made substantial inroads in Iran, and the sanctioned country is now India’s third-largest trading partner. Exports to Iran nearly doubled to $3.3 billion between 2009 and 2013, according to India’s Ministry of Commerce.
Now, Indian businesses will begin to face stiff global competition.
“The sanctions provided us market access in Iran. However, we have to be in the market based on quality and competitiveness,” said S. C. Ralhan, president of the Federation of Indian Export Organizations.