Year 2016 has started with ominous signs. China’s economy is slowing down, the commodities market is in turmoil, oil prices have plummeted, the US is showing symptoms of growth moderation, India’s exports are sputtering and the stock markets are in a bearish mood.
There is, however, one good news that sparks hope in the otherwise gloomy financial climate: Iran, with GDP in excess of $1 trillion (purchase-power parity basis) and a population of 80 million, is open for business, reads an op-ed recently published in the Indian English-language daily Financial Chronicle. Excerpts from the article follow:
Iran and India have a long and historic relationship. Iran is a large supplier of crude oil to India. With the economic sanctions, the footprint of the mutual trade became narrow. Yet trading continued.
Because of the support that India gave to Iran at the time of her crisis, Iran has declared India a priority partner in trade.
While stepping up its import of crude oil from Iran, India has the opportunity of exporting large quantities of rice, soya, tea, sugar, fruits and flowers.
Iran also imports engineering products, automobiles, farm equipment, pharmaceuticals, gems and jewelry, iron and steel and textiles.
India should aim at a bilateral trade of $20 billion to $30 billion, once the indirect trade through the UAE is disintermediated. Iran has already expressed much enthusiasm about expanding trade and mutual investments with India.
It is expected to be the new boom-country for the construction and modernization of ports, railroads and airports, and Indian companies should bid for a fair share of the new business.
Because of the sanctions, Iran’s businesses do not have state-of-the-art IT systems in place. The state IT systems also need to be modernized. If Indian IT companies move in fast, a large market for IT services is waiting to be won. Partnerships with local Iranian entrepreneurs should be forged to penetrate this large and lucrative segment.
Iran has an estimated 300,000 engineers who are creating home-grown startups.
Tehran’s Sharif University of Technology is often called the MIT of Iran and has produced fine engineers.
Internet and smartphone penetration is extremely high in Iran, where 70% of the 80 million population are under 35. At least half of Iranians have access to a smartphone.
There are conflicting reports about the number of Internet users, but according to Internet World Stats, Iran has more than 46 million Internet users (57% penetration), which is almost half the total number of Internet users in the whole of West Asia.
With sanctions lifted and the world lining up to invest in the tech sector, how will the future play out?
Iran has spawned its own startups. The Google Play equivalent of Iran is called Café Bazaar, they have Bamilo instead of Amazon, Taxi Yaab for Uber and Mazando for Ebay. A partnership with India in the hi-tech and startup space can spark boundless innovation.
Iran could be a destination of India’s investments, which would pave the way for exports.
Iran is offering generous incentives to foreign investors to attract investments and managerial talent to globalize its economy. It is guaranteeing equal access to the home market, taxes of 10% or less, 100% repatriation of profits and special economic export zones.
India’s private sector can offer consumer credit, manufacturing technology for auto parts and electric vehicles, generic pharmaceuticals and IT services.
India should take steps to renew its links of learning and education. At this time, about 8,000 Iranian students are studying in India. India provides 67 scholarships every year to Iranian students under various schemes.
Every year around 40,000 Iranians visit India for various purposes, including medical treatment.
