India – Iran Relations

In keeping with the “Asia-oriented” foreign policy of the new Iranian Regime, the Iranian Foreign Minister visited India and it was the first ministerial-level visit from Iran to reset ties with India since the new Government took control in 2021.

Context:–

Recently India and Iran have agreed to drop the clause for arbitration in foreign courts concerning the Chabahar port. Both sides have agreed to pursue arbitration under rules framed by the UN Commission on International Trade Law (UNCITRAL), which is favoured by India over other international trade arbitration mechanisms.

History of India-Iran relations

The relations between India and Iran go back to the ancient civilizations of the Indus valley and Mesopotamia. There was trade between the coast of southern Iran and India through the Persian Gulf and the Arabian Sea. Some Indus seals have been excavated at Kish, Susa, and Ur in Iran.
The Harappan people are believed to have imported silver, copper, turquoise, and lapis lazuli from Persia and Afghanistan. Iran supplied silver, gold, lead, zinc, and turquoise to ancient India. Ivory was imported from India.
Iran is an important nation in India’s neighborhood and in fact, the two countries shared a border until India’s partition and independence in 1947.
The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.

Issues Between Indo-Iranian Ties

The stoppage of oil imports from Iran after May 2019 owing to U.S. sanctions (CAATA) following the revocation of the Iran nuclear deal, therefore, impacting India’s energy security.
India’s close relations with Israel, and Iran’s ties with China, including signing a 25-year strategic partnership agreement.
Iran-backed Houthis in Yemen launching drone attacks against Saudi Arabia and UAE, both are close partners of India,
Iran’s tough statement on the Indian government’s abrogation of Article 370 of the Indian Constitution, gave special status to Kashmir.

Pillars of cooperation:

Economic links and development assistance:

In 2018-2019, India imported crude oil worth US $12.11 Billion. This is due to the ‘Significant Reductions Exceptions’ waiver from the US coming to an end. Under ‘Significant Reductions Exceptions’ the USA permitted India and a few other nations to continue importing crude oil from Iran, without any sanctions.
Despite all these sanctions, to get around the US sanctions, the Reserve Bank of India and the Iranian Central Bank signed a ‘Currency Swap Agreement’ which permits India to pay for the oil imports from Iran using the Indian Rupee (INR). This would save India its precious foreign exchange reserves.

Connectivity Projects:

International transport and transit corridor project: This project initially conceived in 2003 was finally agreed to in 2016. Iranian President Hassan Rouhani, Prime Minister Narendra Modi, and Ashraf Ghani, the Afghan President signed the ‘International Transport and Transit Corridor Agreement’ in 2016 in the Iranian capital of Tehran.

Strategic/Defence Relations:

On the issue of Pakistan state-sponsored terrorism, both India and Iran are victims of these dastardly attacks that have destroyed the people and their lives.
Sunni insurgent groups from Pakistan have targeted Iran in the past. This is one area where further collaboration should be explored.
Iran’s hostile attitude towards the members of the Gulf Cooperation Council and Israel has harmed India’s interests and India has not supported Iran in this regard.
China has also evinced interest to connect the Gwadar port to the Chabahar port. The distance between the two ports is barely 75 Km.

Cultural relations:

An Indian Cultural Centre in Tehran was inaugurated in 2013.
The Cultural Centre was renamed the Swami Vivekananda Cultural Centre (SVCC) in 2018, and was provided a separate premises in 2019.
The International Day of Yoga was organised in 2018, 2019 and 2020.
The 550th Birth Centenary of Sri Guru Nanak was also observed.
- The center conducts regular Yoga and Hindi classes.

Challenges associated with the bilateral relations:

USA sanctions: The sanctions imposed by the USA on Iran after Tehran withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran.
Anti-Iran coalition: Ties also appeared to have been hit by New Delhi’s surprise decision to join the Israel-India-UAE-U.S. group, portrayed as an “anti-Iran” coalition, and by perceptions of Iranian support to Yemeni Houthis behind the drone attack on a UAE oil facility where an Indian was among those killed.
Strategic stakes: Iran also happens to be the entry point for India for trade with the Central Asian countries where India’s geographical approach is limited.
- With the increasing presence of China in Iran, India has been concerned about the strategic stakes of the Chabahar port project.
- The access to the Chabahar port may prove strategically important for India.
- Chinese closer ties with oil producers can bring governance and energy security issues for India.

Conclusion

India has committed USD $20 billion to oil and gas, petrochemical, and fertiliser projects in Iran. PM Modi visited Iran in May 2016, where he signed the historic Chabahar port agreement. It is a ten-year contract for the development and operation of a port with two terminals and five berths. A Memorandum of Understanding was signed on the provision of services by Indian Railways, which included the financing of $1.6 billion for the Chabahar-Zahedan railway line.

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