US-Iran pact could ease India’s oil bill

Softer crude prices may improve India’s fiscal health by lowering inflation, reducing import costs and supporting market sentiment

Assocham on Monday said India is likely to benefit significantly from lower global crude oil prices following the breakthrough agreement between the US and Iran to ensure safe commercial shipping through the Strait of Hormuz.

  The industry body said the agreement, reached in Switzerland amid rising geopolitical tensions, could help stabilise global energy markets and reduce risks of oil supply disruptions through the strategically critical Strait of Hormuz, which carries nearly one-fifth of global petroleum supply.

 Assocham President Nirmal K. Minda said the pact marks an important step towards easing volatility in energy markets. As one of the world’s largest crude importers, India stands to gain substantially if international oil prices remain soft.

  Lower crude prices could reduce input costs across sectors such as manufacturing, logistics, agriculture and retail, improving business margins and consumer affordability.

 Assocham Secretary General Saurabh Sanyal said softer crude prices would also lower India’s oil import bill, helping improve the balance of payments and strengthening external sector stability. Reduced demand for foreign exchange to finance oil imports could also ease pressure on the rupee and boost investor confidence.

 Chief Economist S.P. Sharma noted that lower fuel and transport costs would help curb inflation across supply chains while giving the government greater fiscal flexibility. Savings on fuel subsidies, he said, could be redirected toward infrastructure development and welfare spending.The chamber urged businesses to utilise the lower energy cost environment to expand capacity, improve efficiency and strengthen export competitiveness, while calling on the government to ensure benefits are passed on swiftly to consumers and industry.   

—IANS