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Rediff News  All News  » Business » Iran deal to help India's oil imports; boost bilateral trade

Iran deal to help India's oil imports; boost bilateral trade

November 26, 2013 08:34 IST

The country's corporates said the deal between Iran and six world powers, including the US, will help in sourcing of oil imports from the Persian Gulf state and boost trade with India.

"India has maintained strong historic links with Iran and any step that makes it easy for Iran to engage economically with the rest of the world would help us in sourcing of oil imports from Iran," Ficci President Naina Lal Kidwai said.

"We will see possibilities for exporting our manufactured goods to Iran including pharma, IT, electronics, automobile spare parts and food processing. This relief will benefit Indian companies in promoting bilateral trade between India and Iran which at present is around $15 billion," she said.

Capping four days of negotiations, representatives the US, the UK, Russia, China, France and Germany (P5+1 group of nations) reached an agreement with Iran in Geneva on Sunday.

Under the deal, Iran agreed to give better access to inspectors and halt some of its work on uranium enrichment. But Iranian negotiators insisted they still had a right to nuclear power.

In return, there will be no new nuclear-related sanctions on Iran for six months. "The deal would not only reduce India's import bill as energy prices ease, but also make a big difference to inflation, which has remained bane of the Indian economy for the last six years, more so at the retail level," Assocham President Rana Kapoor said.

Iran will also stop enriching uranium beyond 5 per cent, the level at which it can be used for weapons research, and reduce its stockpile of uranium enriched beyond this point. Iran will also receive sanctions relief worth about $7 billion on sectors including precious metals.

"The deal will go a long way in augmenting India's trade with the Persian country. Exporters were fighting shy of dealing with the Iranian buyers even in regard to the items beyond sanctions, largely because there was so much uncertainty over the payment transfer in the backdrop of sanctions," EEPC India Chairman Anupam Shah said.

India can export a large number of items to Iran , if unhindered access is provided in that market, including high-tech machinery, automobiles, components besides the agri products, Shah said.

The agreement -- described as an "initial, six-month" deal -- includes "substantial limitations that will help prevent Iran from creating a nuclear weapon," US President Barack Obama said in a nationally televised address.

India is likely to resume paying Iran in Euros after a historic accord between western super powers and the Persian Gulf state made it easier to import crude oil from one of its biggest suppliers.

India's total exports to Iran were merely $3.7 billion in 2012-13, much less than potential, under the impact of sanctions. 

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