How India will benefit from the Iran deal

Business Standard brings you look into how Iran stands poised with respect to global trade

Last Tuesday, a historic deal was struck between Iran and the P5+1 nations (five permanent members of the UN Security Council and Germany). The deal limits Iran's ability to manufacture the N-bomb, while lifting international economic sanctions on Iran. The stakes are high for India too. First, lifting of sanctions could mean India can resume buying more oil from Iran which lately it has been buying from other sources, often at considerable geographical distance. Also, the flow of Iranian oil in the international oil market is expected to eventually reduce the international crude oil prices. This will be good news for Indian economy. The Economic Survey (2014-15) estimates that a $1 fall in international crude oil price will reduce India's net import bill by $0.9-billion per annum. 

Further, India could resume work on two of its infrastructure projects. First is the Farzad-B gas field in the Persian Gulf which was discovered by ONGC Videsh Limited in 2008. But due to US sanctions against Iran, India has since not pursued the project aggressively. It is estimated that the gas field holds 21.68 trillion cubic feet (tcf) of gas reserves, of which 12.8 tcf are recoverable. The reserves of Farzad-B are said to be almost thrice of the largest gas field in India. The second relates to building a gas pipeline between India and Iran, which has the world's second-largest natural gas reserves. The other initiatives which could get a boost include, the fast-tracking of the Tapi gas pipeline, and boost to Indo-Afghan trade through the Chabahar port.

Notes on Iran