US Asks India to Cut Oil Imports from Iran

Secretary of State Hilary Clinton visited India on Monday mainly to urge India to reduce oil imports from Iran due nuclear sanctions. In addition to the political discussion, she also pushed for economic reforms that would allow retail giants like Wal-Mart to enter into this emerging market with the West Bengal State Chief Mister Mamata Banerjee. After the meeting with the Secretary of State, the Chief minister said the meeting with fruitful and the US had agreed to invest in sectors in West Bengal such as manufacturing, IT, healthcare, and education. The Indian economy has been growing substantially since the 1980s and the booming middle class could open up huge market opportunities for American firms. Currently the largest retailer in the world, Wal-Mart

, has retail stores in China, Japan, UK, Mexico, etc. and receives 24% of its revenue from overseas. In terms of value, the US is one of the biggest recipients of Indian exports, receiving 16% of all Indian exports worth $25.7 billion. India also receives 1.4% of US exports worth $17.7 billion. India said it already cut down oil imports from Iran, receiving about 12% of oil imports from Iran; India further explained that it needs Iranian oil to sustain domestic demand. However the US said that India should cut down more and was disappointed. The US could even sanction India if India fails to cut oil imports by the end of June. Geographically speaking, Iran is an important trading partner to India, and it needs to maintain a positive relationship due to problems with Pakistan. If India does not comply with US, then not only could India lose imports and exports partnership with the US, but US could also lose investment opportunities in the emerging Indian market, and also fail to gain access into the huge potential retail market. Depending on how India acts in the upcoming months, both American companies and their Indian counterparts could be on the receiving end of the upside risk. Western traders interested in playing India could consider Indian information technology services companies such as Wipro

, Patni Computer Systems

, and Infosys

; There is also the tech-heavy PowerShares India Portfolio

, which seeks to replicate the Indian equity, markets as a whole through a group of 50 Indian stocks including IT, healthcare, financial services, industry, and consumer products.