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INDO-IRAN GROWING TRADE RELATIONS
INTRODUCTION:

Now that the P5+1 countries have struck an interim nuclear deal with Iran which has temporarily eased off sanctions against it, India feels relieved from the frustrated pressure of Western sanctions that had disabled India and Iran to enhance their indispensable bilateral relations. They have already begun talks to enhance ties in trade, particularly in the energy sector. Indeed, blooming bilateral ties between India and Iran can be a highly strategic game-changer not only for the region, but also for the broader strategic calculations with respect to US, Pakistan and Afghanistan’s future.

REACTION:

India and Iran have shared historic ties for centuries, which make them natural friends. It started with the migration of Parsis to the India, following the Islamist invasion of Persia, modern day Iran.

Thereafter, the Parsi community in India became one of the largest minority groups in India and this commonality enhanced further ties between the two nations.

India also houses the second largest number of Shia Muslims, second only after Iran.


Through centuries, their ties have been nurtured through cultural similarities, widespread trade in goods like spices and handicrafts, and people-to-people contact.

Both had particularly tense relations with Pakistan, which bound them closer as well. In fact, India and Iran also covertly joined forces to combat the rising threat from Taliban and Pakistan sponsored extremism during Afghanistan’s civil war.

To enhance stability in Central Asia, Tehran and New Delhi cooperated with Moscow to expand influence in Afghanistan, along with the northern partner- Tajikistan.

Also, India invested in building a strategic road in 2009 which connected Afghanistan’s south-eastern provinces with its main highway and ultimately to Iran, so that it had easy access to the region by by-passing Pakistan completely.

On a bilateral level, India went on to becoming a major importer of Iranian crude oil. In fact, from the regularly emphasized historical and cultural ties, what now seems to be the major common ground and shared interest is energy, of which India is extremely hungry and Iran has plenty.

Iran also supplies Hydrocarbon to India, which is significant because apart from India, Iran only supplies this resource to Turkey, Russia and China.

Before the 2012 sanctions on Iran, India was the second largest importer of Iranian crude oil, importing between 3, 50,000- 4, 00,000 barrels a day. However, since 2012, India’s crude oil import from Iran dropped to around 2, 00,000 barrels a day in 2013.

The Western imposed sanctions, because Iran failed to end its uranium enrichment program, indeed spelled worry for Indo-Iranian ties. India had to succumb to international pressure and drastically minimize trade ties.

However, hope was revived when, in a diplomatic effort to ease tensions, US President Barack Obama and Iranian President Hassan Rowhani spoke directly to end 35 years of hostility.

The interim deal and possible rapprochement gave the Indian government a golden chance to pick up where it left off and begin talks of re-starting trade relations and other projects.

India and Iran jumped to the opportunity when Iran’s Foreign Minister Mohammad Javad Zarif paid a visit to India last month to renew efforts to get the strategic Chabahar Port project off the ground.

The Chabahar Port is partially India’s answer to China’s stipulated ‘string of pearls’ all along the Indian Ocean basin, which India treats as a direct threat to its sphere of influence.

In addition, China is developing the Pakistani port of Gwadar, which is only 72 kilometers away from Chabahar, a move India considers provocative.

Iran has also been increasingly interested in developing its trade infrastructure because Iranians are interested in making their country a north-south trade conduit that connects Europe, Asia and Russia. In fact, they have called for a trade corridor between Chabahar and St Petersburg in Russia.

This is because, post sanctions Iran will be more attractive than post NATO Afghanistan for such a geo-strategic route.

However, in a broader sense, a rapprochement of relations between Iran and US, something that India has been insisting would work in favor of all three, can have many strategic outcomes.

Not only will it make US drawn down from Afghanistan easier, it will also help US to reduce its dependence on Pakistan entirely. India and Iran could prove to be a formidable force to tackle the menace of Taliban.

US must realize that India will take care of its vital interests, which is undoubtedly securing energy supply, with or without American understanding.

In fact, the unbending attitude of US towards India’s relationship with Iran could potentially threaten cordial relations between India and US.

India is one of those few nations who have always maintained decent relations with US, Iran, Israel and the Gulf countries simultaneously, even if it has often had to do so by walking on a tightrope.

India’s recent overtures to Saudi-Arabia, with possible defense cooperation between the two, or talks of a gas pipeline from Oman to India through Iran are examples of a balancing act that India has undertaken to accommodate its interests at a time when Arab states are balancing their own foreign policies after having spent decades under the US umbrella.

Countries like China, Russia and India are emerging as alternate powers for these countries who have not shown much enthusiasm when it comes to a possible rapprochement between US and Iran, USA’s declining power posture in the region and its declining energy dependence on the region.

Thus, India has seized the opportunity after considering these factors. Not only has India shown that it is willing to play a role in post NATO Afghanistan, it has also shown that it can go alone in the Central Asian/Middle Eastern region, which can alter the Indo-US strategic partnership in the region.