New Delhi, June 22 (IANS) Apex industry body ASSOCHAM on Monday welcomed the agreement reached between the US and Iran in Switzerland to ensure safe commercial shipping through the Strait of Hormuz, saying the development is expected to ease global crude oil prices and deliver significant benefits to the Indian economy.

The chamber said the breakthrough — which comes amid heightened geopolitical tensions in the region — could help restore stability to global energy markets and reduce risks associated with disruptions to oil supplies through the strategically important Strait of Hormuz.

“The Strait of Hormuz, through which approximately one-fifth of the global petroleum supply transits, has been a source of significant geopolitical risk and elevated energy prices in recent months. The framework agreed upon after intensive diplomatic talks marks a concrete step towards restoring stability to global energy markets,” said ASSOCHAM President Nirmal K. Minda.

He said India, as one of the world’s largest crude oil importers, stands to benefit substantially from any sustained decline in international oil prices.

“Lower crude prices translate into lower input costs across virtually every sector of our economy, from manufacturing and logistics to agriculture and retail,” Minda noted.

According to ASSOCHAM Secretary General Saurabh Sanyal, a reduction in crude prices could significantly lower India’s oil import bill, which remains a major component of the country’s current account deficit.

“A sustained decline in oil prices will significantly reduce the import bill, improving the balance of payments position and providing greater external sector stability,” Sanyal said.

He added that lower demand for foreign exchange to finance oil imports would also ease pressure on the rupee, helping strengthen currency stability and improve investor confidence in Indian financial markets.

ASSOCHAM Chief Economist S.P. Sharma said softer crude prices would have a direct impact on inflation by reducing fuel and transportation costs across supply chains.

“Lower crude prices translate directly into reduced fuel and transport costs, easing inflationary pressures across the supply chain. This also provides the government with additional fiscal headroom, and savings on fuel subsidies can be redeployed towards infrastructure investment and social welfare,” Sharma said.

Moreover, the industry body urged Indian businesses to utilise the period of lower energy costs to accelerate capacity expansion, improve operational efficiencies and enhance export competitiveness.

In addition, it called upon the government to ensure that the benefits arising from lower crude prices are passed on to consumers and industry in a timely and transparent manner.

ASSOCHAM said it would continue to monitor developments and engage with policymakers to help Indian industry maximise the economic gains arising from the breakthrough agreement.

–IANS

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