India-Iran Relations

India- Iran Relations

This article deals with ‘India-Iran Relations.’ This is part of our series on ‘International Relations’ which is important pillar of GS-2 syllabus . For more articles , you can click here

History of India-Iran Relations

In 1953, Central Intelligence Agency orchestrated a coup to remove Iran’s elected Prime Minister, Mohammad Mossadegh and instituted the rule of Shah Mohammad Reza Pahlavi,

Till 1979 – With the creation of Pakistan in 1947, India and Iran lost the geographical contiguity  
– In Cold War Politics , Shah of Iran allied with  U.S whereas India was non-aligned.
=> Hence, nothing significant during that time
   
1979 – 1990s – 1979 = Islamic Revolution happened in Iran  
During Iran Iraq War=> India supported Iraq
 
1990s Afghanistan Problem
– During 1990s , Afghanistan came under Taliban rule .
– Northern Alliance was fighting against Talibs
Pakistan was supporting Taliban
India & Iran were supporting the Northern Alliance
=> Hence, India & Iran came closer due to their coinciding interests in Afghanistan    


Import of Gas
– During this period, India started to import gas & oil from Iran in huge amount .
– But after 2004, Iran was placed under Western sanctions => India reduced trade under  western pressure 

Dynamics of Iran

Leader of Shia World There is Shia-Sunni divide in whole Islamic world where
– Iran = Leader of Shias
– Saudi Arabia = Leader of Sunnis  
Developing Nuclear Weapon – Iran wanted to develop Nuclear Weapon for regime’s security .
– But  Saudis & Israel are  US allies and they don’t want this because it will disturb the Balance of Power in Middle East in Iran’s favour    

Cultural Relations

  • India’s large Shia population has emotional connect with Iran.
  • Lucknow =  influenced by Persian culture
  • Hyderabad’s Qutb Shahi Dynasty was Persian in origin

Strategic Aspects 

  • Key in fight against Al-queda, ISIS, Taliban etc  which pose danger to India as well
  • Key player in stability of Afghanistan where India has created assets
  • Securing Sea Lanes of Communication (SLoC) by combating piracy in the Indian Ocean region.
  • India aspires to become a net security provider in the Indian Ocean region where Iran is a major stake holder.

Connectivity

  • Chabahar Port : Key in all connectivity projects of India
    • Alternate route to Afghanistan from Chabahar
    • Provide connectivity to Central Asia and Europe, via International North South Transport Corridor (INSTC)
    • Important part of Asghabat Agreement

Energy Security and India-Iran Relations

  • Iran has 2nd largest reserves of Natural Gas 
  • ONGC Videsh Ltd has stakes in Farzad-B gasfield in Iran
  • IPI Pipeline is being built from Iran to India
  • India also wants to setup a joint-venture fertiliser plants in Iran using cheap Natural Gas .

Other Points of Cooperation in India-Iran Relations

  • Indian Wheat and Pharmaceuticals are in great demand in Iran. Even during sanctions, wheat and pharmaceuticals were exported to Iran from India because these two items were out of the ambit of sanctions. 
  • India and Iran , both have stakes in  Indian Ocean and both can cooperate for  regional security from piracy

Challenges

  • Economic: Western Sanctions , Huge unemployment and inflation creating unrest
  • Political : Fundamental authority rests with Supreme Leader Khamenei, an unelected cleric.
  • Involvement in Proxy Wars :
    • Saudi vs Iran Cold War in Middle East is going on. 
    • Heavy military expenditure in Syria (supporting Bashar al Assad)
    • Yemen (supporting Houthis)
    • Hezbollah in Palestine 

while Iran itself facing economic crisis at home.

  • India’s close relations with US, Israel and Gulf countries (Saudis and UAE)
  • Kashmir Issue– Iran’s supreme leader Ayatollah Khamenei equated the on-going Kashmir conflict with that of Yemen

Important Topic : Chabahar Port

Importance

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Chabahar Port and India

It’s importance can be seen in two aspects

Strategic – Alternate Route to Afghanistan
– Chabahar to Zaranj to Delaram
– It will help to end Afghanistan’s dependence on Pakistan for trade  

– Counter China at Gwadar Port : It will help to counter  Gwadar  port  of  Pakistan  built  by  China . Chabahar is located 72 kilometres west of Pakistan’s Gwadar port.  

– Help in Anti-Piracy Operations  
Economic Increased connectivity with  energy rich Central Asia : inline with India’s Connect-Central Asia policy.  

– Lynchpin in  International  North  –  South Transit Corridor that connects India to Central Asia, Russia and Europe.

Still an Issue

  • US sanctions – Difficult to fund the project.
  • Still difficult to reach Afghanistan’s hinterland via this route because of  presence of Taliban
  • Saudi Arabia (large remittances & Indian workers working there) and Israel (strategic importance) will be antagonised because of such mega projects in Iran.

Issue: US out of Iranian nuclear deal

  • In 2015 an agreement, 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 — on Tehran’s nuclear programme. The JCPOA was designed to stop Iran from producing its own nuclear weapons, and set up a framework limiting the amount and degree to which Iran was allowed to enrich uranium.
  • However, in 2018 USA unilaterally announced to decertify the nuclear deal on account of non-compliance by Iran and announced two rounds of economic sanction on it.

Limitations agreed by Iran under JCOPA

  1. Low enriched Uranium stockpile cant exceed 300 kg
  2. Enrichment of Uranium cant exceed 3.67% (for weapons 90% enrichment is required but after 20% enrichment, 90% can be achieved very quickly)
  3. UN & IAEA Inspectors can inspect facilities

In return, Iran gets termination of all economic and diplomatic sanctions imposed on it by the UN Security Council (UNSC), the European Union (EU) and the US

US has pulled out of the deal and imposed sanctions

Sanctions include

  • No individual or company can trade with Iran
  • sanctions re-imposed are “extraterritorial” — they apply to not just American individuals and businesses, but to non-American businesses or individuals as well.

US problems and Reasons for withdrawal

  • Deal doesn’t has binding restrictions on Iran’s Ballistic Program
  • Many of the restrictions in JCPOA have sunset clauses ie provisions will become less strict over the years 
  • Deal doesn’t prevent Iran to prevent sponsorship of terrorism in the region

Implications on India

  • Oil prices:
    • Iran was India’s third biggest supplier
    • Oil prices will increase increasing export bills
    • 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 terms of payment including non dollar payments
  • Indian projects impacted 
    • Chabahar: Chabahar port is nominally exempted from U.S. sanctions, but  suppliers are reluctant to deliver equipment
    • Prevented ONGC Videsh to invest in Farzad B gas field 
  • Remittance: More than 50% of total remittance received by India last year came from the gulf region. Disturbance in the region would lead to decline in such remittances.
  • Security of Indian Ocean Region disturbed => Volatile situation at Strait of Hormuz impacts Indian trade negatively
  • Gives opportunity to outside powers to set base in Indian Ocean which impacts Balance of Power .
  • Giving Space to China : If India succumb to US pressure while China remains firm , then India will lose strategic space to China
  • Increased importance of Pakistan for US : The US has ordered resumption of military training to Pakistan, which it had suspended in 2018 after accusing it of not doing enough to counter terrorist groups, as part of its wider West Asia strategy.

This concludes article on India-Iran Relations. For reading our whole series on International Relations, Click on following link

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