India-Iran Relations

History

Ancient India have had a close relation with Persia, the land of Persians. India–Iran relation shared long historical and civilizational ties. The Indian subcontinent and Iranian Plateau were/are adjacent geographical regions. Both South Asia and the Persian Gulf have strong commercial, energy, cultural and people-to-people links. During the Middle Ages, there was fusion of medieval Persian culture in India since the Delhi Sultanate till the period of Mughal. In modern age, after the Partition of India in 1947, the newly independent India was no longer a neighbouring country to the State of Iran because now we have a newly born Islamic country Pakistan which blocks our direct connectivity to Central Asia and the way to Europe.

Religion

The Parsi community in India is the world’s largest population of Zoroastrians living in any country outside Iran and the reason behind this is that during the Arab conquest of Persia, many Zoroastrians moved to the western coast of India. In the modern era, the Parsi community have contributed significantly to India in the areas of politics, industry, science and culture. Even till today we can’t forget the contribution of this community. Some of the prominent figures are as Dadabhai Naoroji (The grand old man of India), Field Marshal Sam Manekshaw, Nuclear energy scientist Homi Bhabha and the great Industrialist JRD Tata.

This is well known fact that there is a Shia-Sunni divide in the world of Islamic community. Where Iran is the leader of Shia Muslims, Saudi Arabia is considered the leader of Sunni Muslims. This friction led Iran to support Shia militias like Hezbollah, Houthi rebels in Yemen, Fatemiyoun in Afghanistan and Zainebiyoun in Pakistan.

Education

As on today, there are about 8,000 Iranian students studying in India. India provides 67 scholarships every year to Iranian students under different programmelike ITEC, ICCR, Colombo Plan and IOR-ARC schemes. Every year around 40,000 Iranian students visit India for various purposes. Kendriya Vidyalaya Tehran, the Embassy of India School, serves Indian citizens living in Tehran.

Timeline of India-Iran relations

In 1950

The Treaty of Friendship and Perpetual Peace was signed on March 15, 1950 and this was the diplomatic beginning of India–Iran relations.

In 1953

CIA helped a coup to remove Iran’s elected PM Mohammad Mossadegh and instituted the rule of Shah Mohammad Reza Pahlavi. He was considered as the poppet of the USA. From 1953 till 1979, Iran was Under Shah’s regime, or we can say that indirectly under the complete influence of the USA.

In 1979

There was an Islamic Revolution, and it was the time when Iran came under theocratic regime of Ayatollah. After that India and Iran began to establish proximity.

In 1983

An India-Iran Joint Commission (J.C.) established aimed at promoting economic cooperation and organizing foreign minister-level meets.

In 1990s

Afghanistan came under Taliban rule and Pakistan supported the Taliban regime. Northern Alliance was fighting against Talibs and India-Iran supported the Northern Alliance. This was the time when India started to import gas & oil from Iran in bulk.

 India-Iran relations after 2005-06

This was the crucial time again when the relations between both the nations dipped due to Iran’s nuclear program and Iran was placed under Western sanctions. Due to the imposition of those western sanctions, India was forced to reduce trade with Iran. In response to this, initially, India maintained that Iran had the right to have its nuclear program and India had no objection over this. Every country has every right to develop any kind of weapon for their security. Later, India could not resist Western Pressure and had to reduce trade relations with Iran.

During Cold War

The Central Treaty Organization (CENTO), formerly known as the Middle East Treaty Organization (METO) and also known as the Baghdad Pact of 1954, was a military alliance of the cold war. It was formed in 24 February 1955 by Iran, Iraq, Pakistan, Turkey and the United Kingdom. This was formally Iran’s alliance to the USA and was got dissolved on 16 March 1979 at time of Islamic revolution in Iran. During the era of Cold War India wanted to remain non-aligned. This was the crucial time for India when Iran started proximity with Pakistan and furthermore Iran provided military assistance to Pakistan during India-Pak war in 1965 & 1971. Those were some of the reasons of India’s becoming more aliened to USSR.

Iran in world panorama

Want to become Powerful Estate in the Middle East

Iran wanted to develop a nuclear weapon for the regime’s security but Saudis & Israel both are U.S. allies and strongly opposed Iran’s nuclear programme. They believed that this would make the Iran a powerhouse in the Middle East. In 2005 India voted against Iran in the International Atomic Energy Agency. Indo-US nuclear deal was conditional to India supporting the US on the Iran issue. The USA considered India crucial in getting a sizeable majority for its proposal to refer the matter to the United Nations Security Council for positive punitive action against Iran.

Economic & Commercial Relations

India was one of the largest foreign investors in Iran’s oil and gas industry and Iran was one of the largest suppliers of crude oil to India. According to data earlier the imposition of western sanctions, Iran supplied more than 425,000 barrels crude oil per day. Iran’s trade with India exceeded US $13 billion in 2007, an 80% increase in trade volume within a year. This was all being done through the Asian Clearing Union for Financial Transactions. In the financial year 2008–09, Iranian oil accounted for nearly 16.5% of India’s total crude oil imports, 9.5% increase year on year. This amount of imported oil led Iran to become the largest oil supplier to India. In 2010, US came into the picture and warned New Delhi about Indian companies using the Asian Clearing Union for financial transactions. US told that your trade with Iran run the risk of violating a recent US laws and regulations. The Law banned international firms from doing business with Iranian banks and Tehran’s oil and gas sector.

USA’s watchdog on Iran’s Nuclear Programme

The US also suspected that their assets were funnelled to blacklisted organizations in Iran such as the Islamic Revolutionary Guard Corps. On 27 November 2010, the Indian government instructed the country’s lenders to stop processing current-account transactions with Iran using the Asian Clearing Union. India objected to further American sanctions on Iran in 2010 over its nuclear programme. An Indian foreign policy strategist, Rajiv Sikri, dismissed the idea that a nuclear armed Iran was a threat to India. Despite increased pressure by the US and Europe, India clearly stated that it is not willing to stop trade relations altogether. To the contrary, it aimed at expanding the commodity trade with Iran.

India’s support to Iran in Infrastructure

Chabahar Port

The Chabahar port has also been jointly financed by Iran and India. India is helping develop the Chabahar Port, which will give it access to the oil and gas resources in Iran and the Central Asian states. India alone plans to invest US $20 Billion towards development of Chabahar port. It was in the wake of china, who are building Gwadar Port, in Pakistan’s Balochistan. Iran plans to use Chabahar for trans-shipment to Afghanistan and Central Asia. India, Iran and Afghanistan have signed an agreement to give Indian goods, heading for Central Asia and Afghanistan, preferential treatment and tariff reductions at Chabahar.

A partnership between India, Iran and Russia is intended to establish a multi-modal transport link connecting Mumbai with St Petersburg. This will provide Europe and the former Soviet republics of Central Asia access to Asia and vice versa.

North-South Transport Corridor

The INSTC is the ship, rail, and road route for moving freight between India, Russia, Iran, Europe, the Caucasus, and Central Asia. The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali, etc. Dry runs of two routes were conducted in 2014.

1. Mumbai to Baku via Bandar Abbas
2. Mumbai to Astrakhan via Bandar Abbas, Tehran and Bandar Anzali

Zaranj-Delaram Highway

The construction of a highway from Zaranj to Delaram has been completed with financial support from India.

Miscellaneous

Indian Wheat and Pharmaceuticals are in great demand in Iran. These two items were out of the ambit of sanctions. India and Iran have stakes in the Indian Ocean Region, and both can cooperate for regional security from piracy.

Why India is important for Iran?

Iran sees India as a strong partner that will help Tehran to avoid strategic isolation and up to some extent India have always try to surpass the western sanction. Tehran also sees India as help to break out of the anti-Iran stance created by the US in the region. Move toward India also reflects the broad Iranian foreign policy trend toward an emphasis on the “national interest” versus “Islamic ideology.”

Why Iran is important for India?

India regards the Iranian connection as serving a variety of tangible and specific Indian interests. The nexus with Iran is seen as helping India with its energy needs. Iran is India’s preferred choice for the transit for natural gas from Central Asia. This will continue until the situation in Afghanistan and Pakistan stabilizes. Indo-Iranian relationship is important in terms of India’s rivalry with Pakistan.

Indian Ocean region

A second consideration is India’s long-term program to deepen and widen its influence in the Indian Ocean region. This security perimeter should extend from the Strait of Hormuz to the Strait of Malacca and from the coast of Africa to the western shores of Australia. Iran obviously is part of this geography. India-Iran relations facilitates its pursuit of national interests in Afghanistan Central Asia and the Caspian Basin. The Iran nexus is seen as facilitating Indian efforts to contain and encircle Islamabad. In Afghanistan, New Delhi and Tehran both opposed the Sunni-dominated Taliban regime.

Central Asia

In Central Asia, good India-Iran relations will be helpful for India in gaining access to markets, energy, and potential client states. India hosts the second largest Islamic population in the world and its national culture has been deeply influenced by Islam.

Challenges

Political

Fundamental authority in Iran rests with Supreme Leader Khamenei, an unelected cleric. Closer Relations with Iran goes against the democratic Values of Indian State India has enormous stakes in Saudi Arabia, U.A.E. and Israel. Indian bonhomie with Iran can upset these Middle Eastern powers at odds with the Iranian regime.

Kashmir issue

Another very crucial aspect. In many of his sermons, Iran’s supreme leader Ayatollah Khamenei has supported the terrorists in the Kashmir conflict.

Farzad-B gas field issue

ONGC Videsh Limited discovered the gas in the Farzad-B gas field in 2008. Iran asserted that India would not receive preferential treatment and compete with other bidders. India is upset that Iran wishes to auction the Farzad-B field even when India asserted in 2017 that it is willing to put in $11 Billion in the project.

Chinese influence on Iran

Belt and Road Initiative

Under the B.R.I. umbrella, China is presently strengthening its ties with Iran, and other Middle East countries It is using engagements such as the construction of stadiums, railways, industrial parks, 5G highways, clean energy project etc.

25-Year CSCA

Iran and China have signed an agreement of 25-Year Comprehensive strategic cooperation agreement under which China would invest $400 billion in Iran over 25 years in its economy, infrastructure and industries.

Gwadar-Chabahar Connectivity

In a setback to India-Iran relations, Iran further proposed a tie-up between Gwadar and Chabahar. If India succumbs to U.S. pressure while China remains firm, then India will lose strategic space to China.

Bandar-e-Jask port

Iran has offered this port to China, located just 350km away from Chabahar. In 2019, a joint naval exercise was conducted between China, Iran, and Russia in the Gulf of Oman. China is offering its GPS like service Beidou to Iran and has committed to building infrastructure for 5G.

Joint Comprehensive Plan of Action

In 2015 an agreement, the Joint Comprehensive Plan of Action (JCPOA) or Iran nuclear deal, was reached between Iran and the P5+1 group U.S., U.K., France, Russia, China and Germany. The JCPOA was designed to stop Iran from producing its atomic weapons and to limit the amount and degree to which Iran could enrich uranium. However, in 2018 under the leadership of Donald Trump, U.S.A. unilaterally opted out of the deal on account of non-compliance by Iran and announced two rounds of economic sanctions on it. In Dec 2020, President Joe Biden has declared that his administration will revive the Iran Nuclear Deal but nothing has been done so far from either side.

Implications on India-Iran relations

Trade

As per recent reports, the bilateral trade between India and Iran has increased. Iran’s exports to India stood at $361 million during January-July 2022 while it was $267 million during the same period in 2021. India’s exports also saw a 54 percent rise during the first seven months in 2022. The Biden administration already faces bipartisan opposition regarding the extent of sanctions relief as a part of any possible nuclear deal. Hence, the prospects for the resumption of oil trade and other relations between India and Iran to a large extent would hinge on the outcomes of nuclear negotiations.

Higher Oil Price

Iran was India’s third-biggest supplier. India faced the added cost of having to recalibrate Indian fuel refineries that are used to process Iran’s special crude. Iranian oil came with discounts on freight and favourable payment terms, including non-dollar payments.

Indian Project Impacted

Chabahar port is nominally exempted from U.S. sanctions, but suppliers are reluctant to deliver equipment. It has prevented ONGC Videsh to invest in the Farzad B gas field.

Remittances

More than 50% of the total remittance received by India last year came from the gulf region. Any disturbance in the region would lead to a decline in such remittances.

When Head of two States met:

1956- Shah of Iran visited India

1963- Nehru visited Iran

1974- Indira Gandhi visited Iran

1977- Morarji Desai visited Iran

1978- Shah of Iran visited India

1993- Narasimha Rao visited Tehran

1995- Akbar Hashemi Rafsanjani visited India

2001- Vajpayee and Khatami signed the Tehran Declaration

2003- Khatami visited India signed the New Delhi Declaration

2012- Dr. Manmohan Singh visited Iran

2016- Narendra Modi visited Iran

2018- President Dr. Hassan Rouhani visited India

Conclusion of India-Iran relations

Against the backdrop of the Russia-Ukraine war, the U.S. warned not to have trade ties, but India decided to continue its energy ties with Moscow. India wanted to avoid repeating the mistake of abiding by the U.S. sanctions on Iran while China continued to benefit economically. Iran’s strategic partnerships with China and Russia have given Tehran further impetus to challenge Washington in the region. Hence, the evolving geopolitical realignments could pose newer challenges for India to deepen its cooperation with Iran. New Delhi and Tehran have converging interests in trade and connectivity. Iran’s full membership in SCO could stimulate mutual efforts to focus on connectivity projects like the Chabahar port, INSTC. India and Iran have also been trying to diversify their channels of payment to increase bilateral trade.

To know more: MEA/ForeignRelation/India-Iran