The end of the US sanctions regime against Iran presents opportunities that are India's to lose. Easier crude oil imports are the most obvious of them, freeing both countries from a creative if convoluted rupee payment structure during the sanctions era. Roughly $6.5 billion in payments from India are pending from this system, and the prospect of paying for crude oil in dollars from now on could be a double-edged sword. But on the whole, India, the world's fourth largest oil importer, can look forward to the prospect of cheaper crude oil with the world's fifth largest producer returning to the world market.
Beyond this, however, lie the prospects of an overseas market that could well help Indian businesses counter sluggish domestic demand - from auto-components, machine tools, fertilisers, pharmaceuticals and capital goods equipment to commodities such as rice and tea, for both of which India was once a monopoly supplier. Bilateral trade between India and Iran is just $14 billion, with oil tilting the balance of trade in Iran's favour, indicating the scope for growth. Indian business is well placed to cash in on this, given the pro-active role that current and past governments played in keeping relations with Iran on an even keel when sanctions were destabilising that country. In July last year, Prime Minister Narendra Modi took time out to meet President Hassan Rouhani on the sidelines of a global summit in Ufa, Russia. In December, External Affairs Minister Sushma Swaraj hosted the Iranian minister for economic affairs and finance for a review of the two major Indo-Iranian bilateral projects - the development of the Farzad-B field, in which ONGC Videsh had invested an estimated $100 million in exploring and discovering oil and gas, and the development of the Chabahar port and free trade zone, for which India hopes to pre-empt Chinese overtures by rushing through a $150-million line of credit.
The big question is how efficiently India is able to follow up with concrete action on the ground. The Iranian government has already demonstrated some impatience at India's predilection for foot-dragging - a problem also visible in relations with Afghanistan and Myanmar. Then, Teheran has indicated that it may auction the rights to develop Farzad B to American and European oil and gas companies. Euro depreciation aids that continent's companies in bidding for large construction and engineering contracts in Iran to counter their own prolonged recession. There are reports that Iran is eyeing possible renegotiation on an order it signed with India for rail tracks because of price competition from Europe. Historic ties clearly only go so far. The Indian establishment urgently needs to re-establish its reputation by delivering on promises swiftly.