With a peace deal between the US and Iran likely to be signed on Friday, India is looking towards renewing its trade links with Tehran and other Gulf states, including oil purchases, participating in the reconstruction of war-ravaged infrastructure in the Gulf area, as well as resumption of cargo operations at the strategic Chabahar port.
India is particularly looking forward to wrapping up negotiations for the import of fertilizer crucial to the success of its Monsoon crop from West Asia and East Europe at favourable rates now that the two sides will allow ships to pass through the Strait of Hormuz without hindrance.
Top officials said New Delhi has been following the agreement diplomacy and will be looking closely at the deal and working with Indian industry and missions in West Asia to boost trade, which was severely hit by the ongoing crisis in the Strait of Hormuz, and “in participating in infrastructure reconstruction work.”
“Our interest in Iranian oil and use of Chabahar port remains. We will, however, have to study the nitty-gritty closely,” Pinak R Chakravarty, former Secretary (Economic Relations) in the Ministry of External Affairs, told UNI.
The diplomat also pointed out that with 15 per cent of India’s global trade going to or coming from the Gulf, the three-month-long crisis had caused enormous losses to Indian businesses and added: “If the peace holds, then we will get a chance to recoup the losses and access supplies of crude, gas and fertiliser vital to our economy”.
India’s exports to the UAE, Saudi Arabia, and Qatar had dropped drastically as the war progressed, with both exports and imports being impacted. Exports to the UAE alone plunged by 62 per cent in the month of March alone.
India needs 17 million tonnes of urea by August 2026, when the country’s Kharif or monsoon crop is sown. However, domestic production and stocks held by states, farm cooperatives, and the fertilizer companies are insufficient to meet demand. A shortfall of about 2 million tonnes has to be brought in within the next month and a half to make good the needs of Indian agriculture.
“We expected prices of fertilizer, which had shot up from roughly USD 419 per metric ton to peaks exceeding USD 850 in the spring, to come down, and we expect the rupee to strengthen against the dollar, reducing our bill. The end of the blockade will also make it easier and cut time in bringing in our fertilizer needs of urea, potash etc,” said Prof Biswajit Dhar, former WTO Chair at the Indian Institute of Foreign Trade.
India also holds a 10-year operational contract for the Shahid Behesti Terminal at Chabahar, which runs till 2034, but operations at the port have been severely hit by US sanctions. “We will have to see whether sanctions will be lifted in the final deal that is signed,” said Chakravarty.
India, which has sunk some US $ 120 million into the strategically located port at the mouth of the Persian Gulf, can, of course, transfer control to a local Iranian firm, but would prefer to run the port in its own way, using it not only for trade with Iran but also with central Asian countries.
“India used to be a regular buyer of Iranian crude, and it accounted for about 13 per cent of the country’s total crude imports in 20016-17. It fell to negligible amounts as US sanctions tightened and has resumed in April this year as the US waived sanctions to stabilize crude prices … we hope we can buy more crude from Teheran to balance our basket where we take about a third from Russia, and the rest from Africa, West Asia and the Americas,” said petroleum ministry officials.
The United States and Iran announced a preliminary framework agreement aimed at ending more than three months of hostilities, lifting the US naval blockade against Iran, and restoring commercial navigation through the Strait of Hormuz, in the early hours of Monday IST time.
The breakthrough, which still requires formal ratification, triggered an immediate decline in global oil prices as markets reacted to the prospect of reduced tensions in the Gulf region. However, the future of Iran’s nuclear programme remains unresolved and will be addressed in a separate round of negotiations.
Iranian media outlets reported that under the terms of the agreement, there will be an immediate and complete lifting of the naval blockade imposed on Iran.
Brent crude futures price for August delivery fell by over 5 per cent to USD 83.94 a barrel at 5 pm IST. The benchmark crude price had crossed USD 120 a barrel in March in the early days of the conflict.
High crude prices strained India’s balance of payments situation and saw the rupee falling against the dollar by nearly 12 per cent in one single year. Shipping freight rates and insurance also increased as the conflict saw oil tankers and cargo vessels becoming collateral damage.
However, commerce ministry officials said that with the rupee gaining strength and trading for 94.63 to the dollar against Rs 96.57 three weeks back, “we expect rates to moderate and exports to show signs of a fresh pick up.”
India’s merchandise exports in March 2026 had fallen to USD 38.9 billion compared to USD 42 billion in March 2025, a fall of 7.7 per cent.
Jayanta Roy Chowdhury
