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Hello and welcome to World Business Report from the BBC World Service.
Namaste. I'm Devina Gupta in Delhi and on this edition we're taking a cue from President Trump's Middle East tour, where two key players are in focus, Iran and India.
The U .S. is working two very different deals, one that could revive nuclear talks with Iran potentially, and another that sparked confusion over trade tariffs with India, making traders here nervous.
The producers will dump their products in our country since their products will become cheaper so they will go on dumping and what will happen to my country products.
All that coming up for you and in a surprise move, China reports a drop in carbon emissions for the first time ever.
But first let's start with the Middle East tour of President Trump where he said earlier that the US and Iran could be inching closer to a deal.
President Trump called the talks between the two countries very serious negotiations for long -term peace.
He was referring to these talks which happened on Sunday.
The US has insisted that Iran must scrap its uranium enrichment to prevent the country developing nuclear weapons, although Iran insists its nuclear activities are entirely peaceful.
But on this show, we're looking at what does all of this mean for Iran's economy.
To help us break it down, we will be joined by Syamak Shojai, Professor of Economics at William Paterson University and an expert on Iranian sanctions and economic policy.
Welcome, Professor, thank you so much for joining us.
Could you first tell us about how the U .S. had had sanctions on Iran on and off since the 80s, but the latest ones, especially since the U .N. nuclear watchdog flagged Iran's program in 2005 had been much tougher, isn't it?
It has really affected the Iranian economy.
It has contributed significantly to corruption within the Iranian economy because under the disguise of fighting the sanctions and overriding them, a lot of different interest groups within Iran have taken over the oil sales and also the use of the proceeds of the crude oil sales and other exports of Iran under the control of the military units, particularly the Revolutionary Guards, and that has created an economic disaster in the Iranian lives.
Right now, there is shortage of all the basic necessities, including electricity and water.
Inflation is rampant, unemployment among the youth is huge and basically the young people have no hope for their future and they are trying to flee the country as soon as they get an opportunity.
The maximum pressure of President Trump and his military posture has had an impact and I believe that Ayatollahs are ready to make a deal.
But what you've been referring to are restrictions on trade, oil exports, and financial dealings from Iran for businesses in Iran and also the government.
But despite this pressure, Iran has managed to find workarounds, particularly with oil exports, isn't it?
That is true. There are reports that they are currently exporting 1 .8 million barrels a day, mostly to China.
And by going through a lot of like cat and mouse operations and actions which are not exactly kosher but President Trump has expressed many times that if the negotiations do not produce any fruits he's willing to take additional actions to make sure that Iran's oil exports will become absolutely zero and that could it entails some other, even some naval blockade, but the threat by itself is effective.
And I think Tehran is going to make a deal shortly.
Okay. Briefly, very briefly because we don't have much time, but I know that you're optimistic that there could be a deal but we have seen that Trump pulled out, pulled the US out of the 2015 nuclear deal, which was signed between seven countries just a few years ago.
Do you Do you think there could be a new agreement which Trump would stick to this time?
Well, President Trump will change his mind any time that he believes that the US interest requires it.
And there are no guarantees that any side would stick to their agreement.
It is something to be seen in the future.
But you cannot just sacrifice the present and current interests of both parties because of suspicions about future acts.
Shamaq Shulja, thank you so much for joining us.
professor of economics at William Paterson University there.
But what he has mentioned, especially about the oil exports, is already shaking the global economy up.
Iran is the third largest producer in the consortium of oil producing countries called OPEC.
And after this announcement that there could be a potential deal, global oil prices took a sharp tumble.
Let's get in John Evans, who is an analyst and a broker at PVM Oil Associates.
Thanks Thank you so much for joining us John.
Could you give us an analysis of why is it that oil prices are falling?
Good morning to you and good morning to our listeners.
Your previous guest had it right about the Iranian exports being around 1 .5 million barrels per day, up to 1 .8.
One of the reasons that it has shocked the market, if Iran comes back with this production It has to be taken in the context of how OPEC in general is bringing back a wider production cut of 2 .2 million barrels.
The market was gearing itself up to think in the self that this could be something of a push.
With Iran coming back into a market which now will be probably over -supplied, prices can do nothing but go lower.
But do you think that for oil importing nations like India where I'm at.
We import more than 80 percent of our energy need.
There needs to be more clarity on the road ahead.
How should these nations prepare?
Yeah, the interesting part about sanctions and tariffs is they're becoming so corruptive in terms of how people plan ahead.
crude, crude, markets and general product markets are finding it very difficult to plan ahead.
And therefore, so, so, so our countries pricing has become erratic.
And where you see such swings in the price for what the market is actually in a downward grind, but trading the market or working out like a contract India in terms of its huge imports is going to be a very problematic on going further forward. There is no there is no easy way forward to see this to see how how you can get around the the sort of the illiquidity of how you how markets are pricing.
And it's a dangerous guess.
But I'm gonna ask you for it because you're the analyst and I'm in a sweet position that I can ask you this, what's your outlook for oil prices for this year?
What's the range they will be at?
We are looking at, we sort of kind of peg the market around between $55 a barrel and $65 a barrel, with probably our kind of guesses the market will grind lower until it finds a supportive practice or there is a gasoline season where the market finds buying because of people getting in their cars.
But do you think there could be supply control as well from oil producing consortium, OPEC Plus, which is usually how these nations are trying to control oil prices artificially.
No, that's being abandoned as I referred to earlier on.
They are now bringing back all this.
What has happened to OPEC is it's losing market share to many of the Americans, particularly the US and that's why we don't think that's going to work anymore.
We leave it there, thank you so much John Evans, analyst at a broker, PVM Oil Associates.
They're with his analysis of where oil prices could be.
This year Emma Wall is also joining us ahead of platform investments at Hargreeves Lansdown.
Friend of World Business Report, welcome Emma.
Do you agree with John's assessment about global oil prices?
I think global oil prices are very difficult to call at the moment.
There's a reason why commodity investing is often called speculation, because you're so at the whim of geopolitics.
It's not just about supply and OPEC.
And it's not just about the US's relationship with the Middle East. It's also about global trade wars at the moment.
You know ultimately, you know, the oil is a global market.
And if we at the end of the 90 day reprieve between US and China see tariffs shoot back up again And ultimately, that's going to have an impact on demand.
So I think we're very much looking at what's happening with geopolitics and that will very much be the indicator of what happens to the oil price the rest of year and beyond.
You talked about demand.
Can we get in the latest figures that have come from the US about retail sales it seems they were up by 0 .1 % for the month of April.
Barely any rise there.
It seems consumers sentiment might be souring.
Absolutely. and we all know that the US consumer is what drives the US economy.
It's been incredibly robust and in rude health over the last few years, which has helped to stave off concerns post -pandemic and really helped the US be, you know, the golden child when it comes to the G7 and GDP growth.
We are very cautious on the outlook for the US, both in terms of recession, inflation and demand, and indeed interest rates, because those will be pegged very much to it to jobs figures, to inflation and to GDP growth.
Yes, we've had a pause in some of the trade wars, but there is still nervousness around.
And actually, a lot of people are pricing and still around a 30 % chance of recession this year in the US.
And so, I think that's what retail sales are reflecting.
You're with World Business Report from the BBC World Service.
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Emma, be with us, because what you've said actually is a cue for our next segment where you talked about trade tensions.
It seems the next headline from President Trump's Middle East tour, and it's a big one, is for the world's fastest -growing major economy, India.
Because India is one of the highest -tariff nations in the world.
it's very hard to sell into India.
And they've offered us a deal where basically they're willing to, literally, charge us no tariff.
Well, that's the bold claim, because so far nothing's been signed.
And if Trump's statement is true, it could have serious consequences for Indian businesses, because essentially what he's saying is that India has offered zero tariff for the U .S. goods coming in the country.
The BBC's Arshina Shukla has more from Mumbai.
As far as formal talks are concerned, they are ongoing, they have been hectic negotiations over the past few weeks on what would be the sectors where India would cut tariffs and where is it that India would need more reciprocity from the United States as well.
The United States President today said that India has offered zero tariffs on U .S. products.
While there is no formal comment from the India side on what the contours of the deal look like or if it has been finalized.
We do know that the Trade Minister Piyush Goyal is traveling to the US tomorrow to take these talks ahead and expedite negotiations.
India has been proactively offering to cut tariffs on a number of US products like motorcycles or bourbon whiskeys.
And experts say that if India's trade deal with the Britain which was announced last week is anything to go by where they offered zero taxes on a majority of British products.
They also cut taxes on even protected sectors like automobiles.
And there is a chance that India would offer similar terms to the United States as well, although negotiating very hard to keep the politically sensitive agriculture sector out.
Does it also show more openness from India's side?
Going into trade deals, earlier, it did sign a trade pact with the UK.
It has also signed a $100 billion free trade agreement with the European Free Trade Association last year.
So there's a certain sense of openness of doing these trade deals after years of skepticism of staying away from such deals.
Absolutely. Dvina, the global trade dynamics has changed.
There is a move away from protectionism for most countries especially those who have large trading interests with the United States.
With President Donald Trump's tariffs appending global trade, shifting supply chains.
You know, countries like India who have had very tough protectionist stance are relooking at that.
And we've seen that over the last few years, India has been wanting to do more trade deals so that they can secure their markets they can secure, you know, markets for their export products, whether it's textiles, footwear, or gems or jewelry, etc. And these are big, labor intensive sectors here in India.
The Prime Minister Modi wants to push up more manufacturing here and a lot of what it they feel would depend on the export sectors as well we've seen Apple move its production here in India ramped it up and now Apple is looking to even export iPhones out even to the u .s. that is what Tim Cook said last week so to get a bigger holding for manufacturing and the economy here in India Delhi has realized that they will need to open up And we've seen that in a lot of trade deals.
So as Archana mentioned that India seems to be a favourable destination among American companies.
Also, the country has made some concessions like lowering tariffs on select U .S. products.
But any further steps are making traders here increasingly nervous.
Earlier, I spoke with B .C.
Bhartia, who is the president of the Confederation of India Traders, which represents nearly 90 million members across the country.
India is basically agro -based, rural -based economy and we have to protect our agriculture and agro products.
If any tariff policy which affects our agricultural goods will not be accepted in normal conditions.
So we have to first understand what is reciprocal things.
US has been one of India's biggest trading partners.
There's a bilateral trade of at least 190 billion dollars.
In the recent negotiations, India said that it will lower tariffs on certain goods like bourbon and whisky and which are the other negotiables on the table do you think at this stage which can see a zero percent tariff from India's side for the US goods?
If any product coming to India is getting cheaper, we have to I want to see whether it is necessity, comfort or luxury.
Whisky and all those things are all luxury products, not consumed by normal masses of our country.
So the tariff on those products hardly impacts Indian goods and services.
But yes, necessities, agriculture and all those things will have a great impact.
So I cannot agree that India will allow zero tariff on such items. How much of trade will be impacted if such a policy comes into place?
Then we have to also check our dumping policy.
If imports are getting cheaper in my country, then the dumping policy, how will that play a role?
What is the dumping policy, sir?
You see the foreign goods, the producers, will dump their products in our country.
Since their products will become cheaper.
So they will go on dumping and what will happen to my country products.
So everything has to be seen.
Again I maintain that making zero tariffs may not be so easy in India.
But are traders worried when such statements come at least from one side as the US President has said it?
You see trader buys from one and sells to another.
It is the producer who gets affected and the trader has to see that Indian producers get money so that they spend in market.
So definitely traders are concerned and they would always like to ensure that my producers get good amount of money for their produce.
That's why trader will be concerned.
That was BC Bharati, President of the Confrontration of All India Traders speaking to me earlier.
In a statement to local news agencies just a few moments ago, India's foreign minister SJ Shankar has countered Trump's claim, saying talks are still going on between the two countries and nothing is decided till everything is.
Well, am I still with us or am I a lot of guessing game going on there?
But the other part of President Trump's statement was asking Apple CEO Tim Cook to stop shifting iPhone production to India.
Now what does this mean for Apple's operations and for investors watching its exposure in Asia?
I'd say it's more also than just what it means for Apple it's a real indication of the attitude that Trump will take for corporates looking to shift production from China to avoid tariffs to other areas in Asia a lot of firms have been looking at this as a work around and it's very clear from Trump's reaction to Apple that's not going to fly when it comes to tariffs.
So the potential here of what it means for Apple but also potential of what it means for corporates more broadly looking to avoid the China tariffs.
Emma Wall, always a pleasure speaking with you.
Head of platform investments at Hargreeves Lansdowne.
Thank you for joining us and staying with India and another major U .S. company eyeing the market.
Tesla is gearing up to enter the Indian auto space and it's happening at a time when global trade tensions, particularly around U .S. tariffs as we've been talking about are adding fresh uncertainty.
So what does Tesla's entry mean for India's electric future?
BBC's Arun Toi Mukherjee reports from New Delhi.
Electric vehicles in India make up not even 5 % of the overall market.
But carmakers are trying to change that.
In the last five years, electric vehicle sales in India have grown 2 ,000%.
One of the reasons why Tesla is looking to test waters in the world's third -largest auto market after the government announced import duty cuts.
The electric happens to be a power train option.
I asked the chief executive of Mahindra how he felt about the competition.
There's a lot of chatter about the possible entry of Tesla into India's market.
How are car manufacturers like you looking at that?
We always welcome players with technology and people who will help create the ecosystem system to enable EVs to succeed, customers are going to buy into a category only when the offering is exciting and compelling.
We believe the two products we brought out are very compelling.
And both our products are getting that kind of a frenzy and reaction from customers.
Tesla's imminent India debut comes as global uncertainty over tariffs play out.
And in these circumstances, I also ask Mr Jayurikar whether he sees any silver lining.
Due to the tariff conversation, many are predicting that China might dump its excess capacity in countries like India.
Does that create opportunities in terms of cheaper raw materials for manufacturers like you?
I think it's not just a question of dumping or not.
I think the opportunity is probably going to come out of the global uncertainty for demand.
And commodity prices overall will probably move downward if there's uncertainty of global demand.
Companies like Tesla have been facing increasing competition from Chinese car makers like BYD, especially in the affordable EVs market.
But at a time when the US and the European Union are trying to curb Chinese EV imports, could India fill the gap?
I think Indian manufacturers don't export to the US.
Hormaz Saurabji, editor of Autocar Magazine India, remains skeptical.
There is a vacuum and there is a possibility but to be honest we are not there yet.
In fact, we are far from being there.
I don't think any brand has vehicles that are that global and export -worthy to the U .S. Firstly, you have to set up a network there, you have to have some sort of presence there, and clearly, you know, that's a long way off as yet.
Even within India, the biggest challenge stares you in the face.
Driving around cities we don't see too many charging stations, a reminder that the country still lacks critical infrastructure.
And as Tesla eyes India's electric vehicle market over in China, we may be seeing a major energy shift as well.
New research shows China's carbon emissions have dropped, even as energy demand continues to rise.
The findings published in Carbon Briefing show that in just the first quarter, emissions fell by 1 .6 % despite a 2 .5 % jump in energy use.
So what's the real reason behind these lowered carbon emissions?
The author of the report, Lauri Meliwerta, is the co -founder of Center for Research on Energy and Clean Air, and spoke to me earlier.
This is the first time that China's co2 emissions have fallen for a 12 -month period without it being caused by an economic slowdown.
So this is the first time that it's clean energy growth and additions of clean energy capacity that are driving a drop in CO2, and this of course if sustained would be incredibly significant for the global climate effort, for the global energy transition, because China has been the largest driver of global emissions growth by far.
So what has led to this decline then of carbon emissions?
China's seen an unprecedented boom in clean energy, especially solar and wind, over the past few years, since the country's carbon neutrality target was announced.
And now finally, the additions of clean energy have reached the scale where they are covering all of China's electricity demand growth, and push some of the fossil fuel -based power production out of the system.
So how has it changed, percentage -wise, if you want to look at it, from, say, the last decade to now what you're observing in your report.
In terms of the total energy mix, China's share of non -fossil energy is just about to reach 20%, up from 10 % a bit more than a decade ago when when that country first started targeting these kinds of increases.
That increase has been mainly in the power sector, and so in power generation the share of clean energy is more significant.
It's approaching 40%.
So, that means more and more people are now relying on non fossil fuel generated electricity to power their homes.
But is it also translating into what you're seeing in industries that usually relied on coal for power generation are also shifting?
The industrial sector as a whole has shifted as well towards using more electricity that has been mostly in industries that need process heat, steel sector and the cement sector have not been making a lot of progress in that transition, even though there would be a lot of potential for that in steel.
But for those sectors, the reason that their emissions have fallen is that China's real estate boom and construction boom came to an end a few years ago when the government clamped down on excessive financial leverage in the sector.
And so construction volumes have been falling.
And because of that, the demand for steel and cement has been falling.
And those sectors, which are the largest emitters after power generation, have also likely entered a structural decline now.
To what extent have U .S. tariffs also played into this decline of coal -intensive industrial activity in China?
My analysis looked at the period up to March this year, the first quarter, and during that period it was the anticipation of tariffs that actually led to even faster growth in exports because importers in the U .S. were stockpiling ahead of the expected tariffs.
Then when the tariffs were announced there was a slowdown in orders which then led to softer energy demand growth in April.
Now that the tariffs have been eased there's likely to be another jump in demand for those exports for the next few months.
So it's causing this kind of zigzagging.
More interesting and maybe more fundamental effect is that China's response to the tariffs has involved emphasizing the stimulation of domestic consumption, household consumption, so increasing the spending power of households and that could shift the economy to a less energy intensive direction because consumer spending tends to be much less energy intensive than manufacturing industries and construction that have driven the economy for the past decades.
Laurie Millevertov's Center for Research on Energy and Clean Air you've been listening to World Business Report on the BBC World Service.
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