INDIA-IRAN
Current Relations
- Economic Relations
- Bilateral Trade: $3.5 Billion in 2020 (79% decline from previous years)
- Fuel Security: Iran is the 3rd largest oil exporter to India
- Asian Clearing Union members: Settling payments mutually without the use of USD
- Infrastructure: India has constructed the Zaranj-Delaram Highway connecting Afghanistan
- Chabahar: Joint development of Chabahar Port in Iran
- Farzad B: Iran has removed ONGC as a key developer and decided to develop it domestically.
- Strategic Relations
- Ashgabat Agreement: Access of Indian exports to Central Asia
- INSTC: Trade Corridor to Russia
- Trilateral Trade & Transit Arrangement: India, Iran, and Afghanistan
- Servicing Assistance: Servicing the Iranian military’s Russian-based hardware
- Maritime: Both nations cooperate on maritime security under IORA
- Chabahar: Iran provides access to Indian exports to Afghanistan
- Delhi Regional Security Dialogue: Iran participated in the regional dialogue on Taliban in Afghanistan in 2021.
- Cultural Relations
- Shiite Population: India has the 2nd highest Shia Muslim population
- Pilgrimage: Shia pilgrimage circuit – Qom, Mashhad, etc.
- Soft Power: Bollywood is traditionally popular in Iran
- Medical Diplomacy: Iranian patients visiting India
- Education: Scholarships under ITEC, ICCR to Iranian students
- Multilateral
- IORA
- INSTC
- Ashgabat Agreement
Importance/Benefits
- Economic
- Crude Oil: Cheapest and geographically the closest source of oil crude.
- Investment: India has investments in Chabahar, and the railway link to the Afghan border.
- Strategic
- Location: The Strait of Hormuz oversees the majority of India’s oil and gas imports and hence is strategically important.
- Afghanistan: Iran is the only viable option for overland trade to landlocked Afghanistan.
- Update: Iran has said it will cooperate with India in shipping humanitarian assistance, including wheat and medicines, to Afghanistan under the Taliban.
- Chabahar Port
- Countering Chinese presence in the nearby Gwadar
- Access to Afghanistan through a land route
- Courting Saudi Hegemony: Iran maintains a favorable balance of power in the region, which serves as a counter to Saudi Arabia, a nation that has closer ties with Pakistan. This dynamic helps India by limiting Pakistan’s regional influence through Saudi support.
- Isolating Pakistan: By fostering strong relations with Iran, India ensures that Pakistan remains isolated geographically, as it lacks regional allies on its western borders.
- Access to Central Asia: Iran is crucial for India’s access to Central Asian markets, providing a direct route and acting as a gateway to the region, especially through infrastructure projects like the Chabahar Port. This access bypasses Pakistan and strengthens India’s connectivity and trade with Central Asia.
Concerns/Issues
- Economic
- CAATSA: It has caused India to limit its trade with Iran fearing American sanctions.
- Strait of Hormuz: Conflict in this region threatens India’s economy through higher crude prices.
- Decline in Trade: India-Iran trade has fallen by 79% in April-Nov 2020
- Strategic
- US-Iran Conflict: Closer strategic ties with the US has led Iran to be isolated from Indian interests.
- Chinese Influence: $400 billion trade and military deal threaten to increase Chinese presence in our neighborhood.
- Middle East Quad: The grouping of India along with Israel, USA, and UAE might be perceived as anti-Iran and may sour the relations.
- Kashmir Rhetoric: Iran has frequently condemned Indian policy measures with respect to Kashmir.
- Nuclear Escalation: With Iran suffering a security dilemma due to the US, nuclear escalation threatens India’s neighborhood.
- Israeli Antagonism: India’s closer relations with Israel have caused a rift in the India-Iran relation.
Quotes
- “The India-Iran mutual understanding has matured to a point that neither side is making demands on the other’s strategic autonomy.” – MK Bhadra Kumar, Diplomat
Indian interests in Iran must go beyond energy security and also not be dictated by the US. The need of the hour is to actively engage with Iran on increasing bilateral trade and also actively collaborating on stabilizing Afghanistan’s future.