How India Will be Affected by Iran’s Nuclear Deal

The deal to lift international sanctions against Iran will allow India (and many other countries) to reinvigorate its economic and strategic ties with Tehran, reports the BBC.

Bilateral trade between the two countries is currently an estimated $14bn with the balance of trade in heavily in Tehran’s favour. Indian exports to Iran were around $4.2bn in 2014.

As reported by the BBC, India mainly imports oil from Iran, but has been hampered by restrictions placed by global powers.

For instance, due to the sanctions, India pays for the oil in Indian rupees and the money is deposited in an Indian account. There is currently some $6bn in pending oil payments to Iran.

The lifting of the sanctions now means India will have to pay for the oil in dollars.

As regards Indian exports (automobile parts, tools, motors and chemicals), a drop is expected.

“Indian exporters will have to compete with Eastern European manufacturers who produce low end products like spanners, hand tools and auto parts. Since the value of the euro has depreciated in the last few years, we will be facing stiff competition from European manufacturers,” said Ajai Sahai, the director general of the Federation of Indian Export Organisations.

But it’s not all doom and gloom. India’s pharmaceutical and IT companies are expected to gain in the long-term.

“Many of the big Indian pharmaceutical and textile businesses were reluctant to deal with Iran because they were afraid of the sanctions. Now they can deal with Iran freely and invest there. So it will be a big boost for Indian exports,” said Sahai.