Efforts by India to establish a trade increase between India and Iran should hold interest to investors for several reasons. India has decreased its imports of oil from Iran. This is in compliance with demands by the United States for sanctions against Iran for its nuclear program. Nevertheless India is still Iran’s second leading purchaser of crude oil and a historic trading partner. Despite the ongoing difficulties between Iran and the USA, India seeks a trade increase between India and Iran. One is by encouraging Indian exporters to sell foreign-made products to Iran, adding a fifteen percent profit along the way. Unfortunately, for India, payments for oil in Rupees are substantially more than what Iran uses to buy products from India. India exported about $3 Billion in goods and services to Iran in 2013 and paid around $11 Billion for crude oil. The hoped for trade increase between India and Iran may include exports from India of consumer goods, auto parts, chemicals, and engineering materials. An interesting possibility for investing in foreign stocks might be to invest in an Indian company such as those planning to upgrade the Iranian port of Chabahar on the Gulf of Oman.
Countering Chinese Influence in the Region
The two big powers in South and Southeast Asia are India and China. They are the two most populous nations on earth. And, the two are historic rivals for influence and power in the region. India has about 1.220 billion people. The population of China is around 1.35 billion. More than a third of the 7 billion people on earth are Chinese or Indian. In addition both India and China have growing economies. Along with Russia, Brazil, and South Africa they comprise the BRICS nations whose influence in global matters is rising. The investment by India in the port of Chabahar is only forty miles away from the Pakistani port of Gwadar Pakistan where China is investing in increasing its influence. As trade and Chinese economic power grow in the region India is increasing its ties to other nations as a counter to Chinese influence. Many see a desired trade increase between India and Iran in the light of India’s historic rivalry with China.
Investment in India and or Iran
Iran is still in economic dire straits due to US and other Western led sanctions. Until it comes to terms with the West regarding its nuclear ambitions that situation is unlikely to change. However, the new president of Iran may help change Iranian foreign and domestic policy and perception of Iran by the West. As we mentioned in our article, Invest in Peace in Syria, there is always the chance that rationality will prevail. If that happens a substantial trade increase between India and Iran could happen with investing in India being a great way to invest in Iran. As always fundamental analysis of investments is critical to long term success. If one is going the Indian company route to investment in the event of a trade increase between India and Iran investing in ADR’s of Indian stocks is a possible route. These securities need to provide information in English making the job of analysis much easier and more accurate.