Indo-Iran Relations

WHY IN NEWS:

• India’s External Affairs minister recently attended the swearing-in ceremony of newly elected Iranian President Ebrahim Raisi.

HISTORY OF INDIA-IRAN RELATIONS:

• The two countries shared a border till 1947 and share several common features in their language, culture and traditions.
• Both South Asia and the Persian Gulf have strong commercial, energy, cultural and people-to-people links.
• Independent India and Iran established diplomatic links in 1950 and both countries signed ‘Treaty of Friendship and Perpetual Peace’ in the same year.
• However, Iran’s involvement in the Cold War politics separated New Delhi and Tehran in converging their relations until 1990s.
• In 2001, the two countries signed the “Tehran Declaration” which set forth the areas of possible cooperation between the two countries.
• In 2003, both countries signed “The New Delhi Declaration” which set forth the vision of strategic partnership between India and Iran.
• Since then, both countries have kept good relations, extending to areas of trade, cultural exchanges and diplomatic visits.

WHY IRAN IS IMPORTANT TO INDIA?

• Geostrategic:
  • Its proximity to the Hormuz strait gives Iran the ability to influence maritime activity along the Persian Gulf.
  • Any disruption along the Strait of Hormuz would lead to a big spurt in the prices of oil and gas, which in turn would create a major global economic crisis.
• Connectivity:
  • It is of immense importance to India as it provides an alternate route of connectivity to Afghanistan, Central Asia and Europe, given the problems with Pakistan and China’s Belt and Road Initiative, which India boycotted.
  • Iran is a major point in major connectivity projects such as the International North South Transit Corridor.
• Energy security:
  • The growing Indian economy needs newer sources of energy supplies.
  • Iran is the third-largest source of oil for India after Saudi Arabia and Iraq.
  • If India is able to negotiate a way around US sanctions, Iran could once again be a vital source of energy for India at a time when oil prices in India have skyrocketed
• Share a common cause in Afghanistan
  • India and Iran have faced attacks from the Taliban, Al Qaeda, Jundullah, Lashkar e Toiba and other sunni groups, and have a common concern about the Taliban gaining power in Kabul.
  • Iran has publicly stated that an Islamic Emirate in Afghanistan is a security threat for India and Iran and an existential threat for Pakistan, and as neighbours, India and Iran have cause to worry
  • India and Iran have been left out of the US Russia China-  Troika and Troika plus talks with Pakistan, thus far, despite being regional powers
• Market:
  • India’s future growth requires the vast untapped markets of the central Eurasian landmass, particularly Central Asia and Eastern Europe >> Iran is considered to be the gateway to these markets

POSITIVES IN RELATIONS:

• Economic relations:
  • Bilateral trade:
    • India-Iran economic and commercial ties have traditionally been buoyed by Indian import of Iranian crude oil
    • India was second-biggest buyer of Iranian oil after China before sanctions halted supplies in May 2019.
    • Iran in 2017-18 was its third-largest supplier after Iraq and Saudi Arabia and met about 10% of total needs.
    • Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of other countries.
  • An agreement for oil payment in rupees
    • An agreement had been signed by the Indian and Iranian government for oil payment in rupees instead of US dollar.
    • This has benefited India in saving forex reserves and strengthening Indian rupee.
  • Investment:
    • Indian government has made several strategic infrastructural investments in Iran.
    • For instance: In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
    • India has also built a 240-km road connecting Afghanistan with Iran
  • Indo-Iran Joint Commission Meeting (JCM)
    • India and Iran hold regular bilateral talks on economic and trade issues at the Indo-Iran Joint Commission Meeting (JCM)
• Diaspora:
  • The Indian community has a strong presence in Iran, comprising of around 4000 Indian nationals.
  • Likewise, there are Iranian diaspora in Hyderabad. There is an Indian school in Tehran run under the aegis of Embassy of India.
• Diplomatic:
  • Iran has its Embassy in New Delhi and two Consulates General in Mumbai and Hyderabad and two Cultural Centres in New Delhi and Mumbai.
  • India, in addition to the Embassy in Tehran, has two Consulates in Iran, one in Bandar Abbas and other in Zahedan.
• Cooperation in securing peace in Afghan
  • Iran and India have cooperated on connectivity projects for Afghanistan and Central Asia, including at Chabahar and the INSTC that goes through Bandar Abbas
  • While Russia, US, China have advocated power sharing arrangements involving the Taliban in Kabul,  India and Iran have upheld the legitimacy of the democratically elected government in Afghanistan, and could cooperate in  bolstering the Ghani government at this time.
• Mutual respect:
  • As a traditional partner, Iran has rarely spoken about India’s internal affairs, including sensitive areas like Kashmir
• Political:
  • India’s External Affairs minister recently attended the swearing-in ceremony of newly elected Iranian President Ebrahim Raisi.
• Cultural:
  • The Indian Cultural Centre was established in 2013 in Iran. It was later renamed the Swami Vivekananda Cultural Centre (SVCC) in 2018.
  • As India has a Shia population second only to that of Iran, religious tourism is strong between the two countries.
  • India provides various scholarships to Iranian students through initiatives such as the ITEC.

ISSUES

• India acting on U.S pressure:
  • Trade curtailed
    • India stopped importing oil from Iran in mid-2019 following sanctions on Iran by the Trump administration.
    • Prior to that India used to import about 2.5 billion tonnes of Iranian oil a month, that accounted for more than 10% of its energy needs
    • In 2012 when the US had issued a similar demand, India had stood firm and not cut its oil imports.
  • Failed in Chabahar project
    • The US sanctions have severely curtailed India’s ability to develop the Chabahar project
    • As a result in 2020, Iran decided to go ahead with its rail project, dropping India from the deal, as it was unable to participate.
  • India not included in Farzad B gas field project
    • ONGC Videsh discovered the gas field in 2000 >> and was a part of project >> but now replaced by Iran's domestic company
• Iran’s nuclear ambitions:
  • India has never supported Iran’s mission to build a nuclear bomb. India has even voted against Iran in the International Atomic Energy Agency in 2005.
• Anti-India stance in Kashmir issue
  • In the aftermath of government’s decision on 370 in Jammu Kashmir on August 5, 2019, Iran’s leadership, and clerics issued sharp statements, criticising India’s move.
  • Moreover Iran had provided material support to Pakistan during both the 1965 and 1971 Wars.
• Closeness with China:
  • Iran has increased ties with China, something that worries India, as Iran and China signed a 25 years 400 billion dollar infrastructure partnership, which could affect Indian interests in Iran, the ports as well as oil and gas resources.
• Shia-Sunni dynamics:
  • Iran is Shia majority country. India houses a strong Shia population, much of which is concentrated in electorally-significant areas. This community and the even larger Sunni one make the Indian government sensitive to any Sunni-Shia tension in the Middle East that could potentially spill over into India.
• Israel and Saudi Arabia factor
  • India has a number of key relationships in the region that will keep it from getting too close to Iran.
  • For instance, India has close ties with Israel and Saudi Arabia, both of whom have strained relations with Iran.
• Diplomatic tussels:
  • In 2013, an Indian oil tanker was confiscated near the Strait of Hormuz by Iranian forces and taken to the port of Bandar Abbas on the pretext of the ship violating environmental norms
• Global pressure on Iran
  • Isolation of Iran in global stage
    • US, UK and Israel have come down heavily on Iran, accusing it of carrying out the attack on an Israeli owned tanker last week, which saw a UK national killed, an issue now being taken up at the UNSC, where India is the president.
  • U.S sanction of new Iran President:
    • In November 2019,  the US Treasury department put Ebrahim Raisi (now President of Iran) on its list of individual sanctions for alleged human rights violations during his tenure as Iran’s chief judge

WAY FORWARD:

• Multilateral approach:
  • India needs to continue the balancing act in West Asia that allows it to have good relations with Saudi Arabia, Iran and Israel alike. At the same time, maintaining distance from regional fractures and conflicts would allow India to pursue its economic and geo-strategic aims in the region.
• Proactive:
  • Iranian officials have cited delay in the proposed $400 million funding from India as the reason for dropping India from the rail project. Such instances should be avoided in the future. India should avoid such instances in the future. A dedicated mechanism should be established.
• Prospect alternatives:
  • India should have in place alternative plans if its relations with Iran or sanctions upon them get worse.
  • For instance, Guyana offers an alternate energy source for India, as it has large source of untapped oil reserves.

PRACTICE QUESTION:

Q. ‘Recent attempts by India and Iran to reset their economic and diplomatic ties have been under strain for several reasons’. Discuss.