New Delhi: The announcement that the US and Iran have finalised a deal to end their 107-day conflict and reopen the Strait of Hormuz is expected to boost India’s exports to West Asia, which was severely impacted by the hostilities, spur manufacturing activity and help stabilise the rupee, according to exporters and experts.
They said the announcement, if implemented successfully, would reduce pressure on India’s import bill, ease inflationary covers and create a more conducive environment for trade.
The peace agreement would be signed on June 19 in Switzerland.
Also read: Nukes, crude sanctions & frozen assets: Inside the 14-point US-Iran peace agreement
The US and Iran have reached a peace deal to end a four-month war that disrupted global energy supplies, pushed oil prices above USD 100 per barrel, and brought the Middle East to the brink of a wider regional conflict.
For India, which relies heavily on West Asia for crude oil, LPG and LNG supplies, the deal promises relief from high energy prices, pressure on the rupee, and inflation risks that intensified during the conflict, economic think tank GTRI said.
“For India, the agreement brings immediate economic relief as the conflict has exposed India’s dependence on West Asia, from where it sources roughly 50 per cent of its crude oil imports, around 70 per cent of its LPG supplies and nearly 90 per cent of its LNG imports,” GTRI Founder Ajay Srivastava said.
The disruption of shipping through the Gulf raised India’s energy import bill, increased inflation risks, weakened the rupee and forced refiners to seek alternative supplies from distant markets.
Reopening the Strait of Hormuz is expected to stabilise energy markets, ease pressure on oil and gas prices, strengthen the rupee and improve India’s growth outlook, he said.
Mumbai-based exporter and Founder Chairman, Technocraft Industries India, Sharad Kumar Saraf said the announcement paves way for the end of uncertainties, economic slow down and unwarranted hardships.
“The end of war and hostilities will not only help in quantum jump in India’s exports but will throw open a host of new business opportunities. Next 2-3 years will accelerate India’s efforts for a Viksit Bharat,” he said.
Federation of Indian Export Organisations (FIEO) President S C Ralhan said any easing of geopolitical tensions in the region should help restore normalcy in global energy supplies and moderate prices.
“For India, this would reduce pressure on the import bill, normalise exports, support rupee stability, ease inflationary concerns, and create a more conducive environment for trade and economic growth,” he said.
Experts also said opening the Strait of Hormuz would help smoothen the movement of ships in international waters. The closure has led to an increase in insurance and freight rates. Ships are carrying goods from the Cape of Good Hope
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