India will be a major beneficiary of Iran deal

Subject

The impact of the Iran deal on India's energy sector.

Significance

On April 2, Iran and the P5+1 countries (five permanent members of the UN Security Council plus Germany) agreed a framework agreement on Iran's nuclear programme. Despite continued political posturing from both sides, a final agreement is likely by the June deadline. This could set the stage for economic sanctions to be phased out on a gradual basis, potentially leading to a resurgence of Iranian crude in the energy market. This will have implications for India, which has oil and gas links to Iran.

Impacts

• India's energy links with Latin American oil suppliers will strengthen.
• Due to US pressure, Delhi is unlikely to entertain talks about the India-Pakistan-Iran pipeline.
• India's trade balance will continue to benefit from a lower oil import bill, relieving some pressure on public finances.