US-Iran MoU seen as major boost for India's export sector

The signing of the US‑Iran Memorandum of Understanding is a significant breakthrough that will reshape global trade dynamics and provide a macro‑economic breather for India’s export‑import community acting as a "logistical game-changer", industry body FIEO said on June 18.

The conflict in West Asia suppressed India’s trade volume particularly with the Middle East and the US-Iran pact is expected to unlock pent‑up consumer and industrial demand, said S C Ralhan, President, FIEO.

He forecasted an immediate revival in order books, adding that the MoU paves way for Indian exporters to scale up their presence and accelerate shipment trajectories over the next few fiscal quarters.

The industry body said the lifting of the US naval blockade will eliminate long maritime detours, slash exorbitant freight fees and war‑risk insurance premiums.

Normalization will slash these overheads, ensuring smoother, faster, and remarkably cheaper transit times to West Asia and European destinations.

Nearly half of India’s crude imports and a large share of container traffic passes through the Strait of Hormuz.

FIEO President said that India has started FY27 on an "extremely positive note with double digit growth in each of the two months" adding that situation will be more favourable in upcoming quarters

"We are firmly on our course to achieve the target of US$ 1 trillion of merchandise and services exports, as announced by the government," Ralhan said.

Following the US-Iran MoU, Brent crude has corrected sharply toward the $78 per barrel range.

“Cooling of the geopolitical risk premium directly lowers the import bill, reduces fuel-led inflation, and dramatically softens input costs for heavily crude-dependent export sectors like plastics, paints, textiles, and chemicals, improving our global competitiveness,” FIEO President added.

Dollar demand from oil refiners has eased, along with robust foreign capital inflows, collectively providing the Indian Rupee a firm footing, strengthening it to 94–94.50 against the US Dollar.

“Except for the headline, no changes have been made to the story, as it has been sourced from IANS.”