Reliance Industries, India’s most valuable company is forced to make a choice. It is an either or choice imposed by the big brother. The United States after trying a lot of other things is now trying to stop companies doing business in Iran. The threat is simple. Choose the $13 trillion US market or $250 billion Iran market, but you can’t have both.
“We know who these companies are – Shell, Vitol, BP and Reliance – and we need to give them a choice: you can do business with Iran’s $250 billion economy or our $13 trillion economy, but not both,” said Senator Mr Jon Kyl, who was a part of the bipartisan coalition of 25 Senators that introduced the Bill. (Business Line)
This move is more towards the sanctions on Iran than anything related to protectionism. But, whatever the US is doing is affecting India directly. Till yesterday it was the Indian IT which was affected with the H1B issues and the buy American policies. Now, the pandemic is spreading to oil and gas industry too.
The new policy of sell American might just be the last thing India Inc need right now. From the look of it, US might even get its way. As we have seen in the Iraq war, there is really nothing which stops the big brother. This time it is only better that US hasn’t declared a war and instead chose sanctions.
Iran which has one of the largest oil reserves imports 40% of its refine crude oil. That is where companies like Reliance and Shell come in. With the new Jamnagar facility, Reliance is one of the world’s largest refiner and can refine the toughest of crude’s. With that capacity you only wish to do more business in more countries and not the other way around.
Whenever the US announces a new policy change or a statement, India Inc reacts. It started with the H1-B’s where a huge backlash was seen. Which prompted the Indian companies in the US to hire foreigners or local talent. And for the obvious reason quite staggering in their threat. US is a $13 billion economy – still.
From the obvious threat and the lost opportunity anyone would choose US. If this ban comes out, doing business in this globalized world would become increasingly complex. It would also give unfair advantage to one country over the other. Foreign policy and geo-politics will have a greater say than they should.
With all the things happening in the financial markets shouldn’t the rest of the world pose some sanctions on the US as well, you know for the credit default swaps and stuff?
How will the markets react to this news?