Here's why a resurgent Iran is good for India

Iran is finally free of crippling sanctions, although a few remain, and is open for business. India should make use of the opportunity. The US imposed sanctions after the overthrow of America’s puppet Shah, by the Islamic Revolution of 1979 and the hostage crisis that followed. In 2006, the UN imposed sanctions against Iran’s nuclear programme. Now that Tehran has convinced the International Atomic Energy Agency (IAEA) that it is complying with the terms of the deal it struck with major powers last year to satisfy the world Iran has no nuclear weapons ambition, the sanctions have been lifted and Iran’s economy will open up. The biggest beneficiary, of course, will be Iran. But India, too, has much to gain.

For the last 15 years, Iran’s annual crude exports have halved: from a little over 2 million barrels per day (mbpd) to a little more than 1 mbpd. For a nation that holds one of the largest oil reserves in the world, this is nothing. Iran now has the chance to flood the oil market with cheap, high quality crude. Expectedly, oil fell to $28 per barrel soon after the curbs were lifted. This is good for an oil importer like India. Iran’s annual imports, $10-65 billion each year through 2000-15, are expected to shrink dramatically, improving its balance of trade. That’s because a large part of this was, ironically, refined fuels: its refineries have been starved of technology and investment for decades and are rusting hulks. Global oil majors will rush to fill the gap. Indian players should join the race to build refining capacity in Iran. Over the last 15 years, foreigners have invested amounts ranging from $1 billion to $4 billion annually in Iran. Indian carmakers, pharma companies and IT services players must seize the opportunity in Tehran. Construction and infrastructure, lagging in India, could suddenly find a vibrant new market in Iran.

Just as China practises communism-lite, Iran is Islamic-lite: it is no fundamentalist state like many Arab monarchies. Its social openness should make it easier for Indians to work and invest there than in many other places in the Gulf.