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Posted at: Sep 11, 2015, 12:51 AM; last updated: Sep 10, 2015, 11:21 PM (IST)

India should build on its historical ties with Iran

India should become a key player in the Middle East and Central Asia. This is especially significant given its geographical proximity to and historical links with both the regions. After the lifting of sanctions against Iran, many countries will compete to invest there, India should take the lead.
India should build on its historical ties with Iran
Prime Minister Narendra Modi with Minister of Foreign Affairs of the Islamic Republic of Iran, Mohammad Javad Zarif at a meeting in New Delhi. PTI

The relationship between India nad Iran has been generally marked by geniality except for few instances, like in 2005 and 2006 when India voted against Iran in IAEA and in 2010 when India protested against the Iranian supreme leader who equated Kashmir with Afghanistan and Gaza. In the recent times, two important events require a review of Indo-Iran relations — the Nuclear deal and meeting of the Prime Ministers in Ufa, Russia.

Earlier, under US pressure, India had to implement sanctions against Iran. The nuclear deal has opened more passages for India to do business with Iran and vice-versa. The bilateral trade between India-Iran in 2014-15 was $13.13 billion, with a trade balance of $4.78 billion in favour of Iran. The majority of Indian exports to Iran included cereals, mostly rice ($1.24 billion) and iron and steel products ($0.78 billion). 

After the nuclear deal gets a green signal from the US Congress, where it is likely to face opposition from the Republicans, most western countries will move to invest in Iran. After the removal of economic sanctions on Iran, Indian exports, especially auto components, will face more stiff competition from other countries exporting to Iran. In the year 2014-15, India exported nearly $102 million worth of auto components to Iran. The loss will be compensated by additional exports of farm products. India should negotiate a Free Trade Agreement (FTA) with Iran. Such an agreement would be beneficial for both the countries and Indian exports will face less competition from other exporting countries to Iran. Through Iran, Indian products will also get market access to Europe and Africa. The trade deficit of around $8.9 billion that India faces with Iran can be reduced through FTA by an increase in exports of existing products, and textiles, apparels and engineering products.

In a meeting with Narendra Modi in Ufa, Russia, during the Shanghai Cooperation Organisation (SCO) Summit, Iranian Prime Minister, Hassan Rouhani offered India a bigger role and invited investments to the tune of $8 billion from India, to build ports, railway and roads in Iran. 

In 2003, India and Iran signed an agreement to develop the Chabahar port under the NDA government. In May 2015, India signed a Memorandum of Understanding (MOU) with Iran to develop it with an investment of $85 million. India will construct a container terminal and a multi-purpose cargo terminal. To India, Chabahar port will give access to the large reserves of oil and gas in the Central Asian region by circumventing Pakistan. India helped Afghanistan in the construction of the Delaram-Zaranj road (Route 606), which connects Afghanistan with Chabahar port via Milak in Iran. This port will help to provide an easy entry into Afghanistan, where it is supposed to play a major role after the withdrawal of NATO forces. In future, this port will attenuate the role of Pakistan in deciding regional affairs. Significant projects such as Turkmenistan, Afghanistan, Pakistan and India (TAPI) and Iran, Pakistan and India (IPI) pipelines have been lingering on for many years, because of the relations between Pakistan and India.  India is  planning to develop an underwater sea gas pipeline known as Middle East to India Deepwater Pipeline (MEIDP).  This pipeline will bring gas from Chabahar on the southern coast of Iran and from Ras Al-Jafan on the north-eastern coast of Oman to Porbandar in Gujarat. It will be developed by a New Delhi-based company SAGE (South Asian Gas Enterprise) at an estimated cost of around $4 billion. There are plans to integrate Chabahar port with International North South Transport Corridor (INSTC) in the future. After the expansion, it will have a higher capacity than Bandar Abbas, which is highly congested and handles much of its traffic. Chabahar port will be Iran's first deep-water port with modern shipping standards. If in the upcoming future, Uzbekistan and Turkmenistan also join INSTC; Chabahar can become an ideal route to connect to the Gulf of Oman and Arabian Sea. The INSTC can be India's answer to China's “One Road and Belt strategy,” through which China wants to connect with Asian, European and African countries via rail, roads and sea. India has cordial relations with both Israel and Iran. It needs the support of both to increase its influence in Central Asia and Middle East. Iran will fulfill India’s growing energy demands and serve as a gateway to Central Asia. Israel caters to its defence needs, counter-terrorist operations and cutting-edge technologies in  agriculture, water resources etc. Israel is India's third largest military supplier, after Russia and the US.

The Islamic State has vowed to attack India with the help of the Taliban and Pakistan. According to an internal recruitment document of the IS, it is planning a big attack on India. Help from both Iran and Israel is crucial for neutralizing the IS threat. It is notable that Iran has supported groups like Hamas and Hezbollah, and also provided military support to Syria and Sudan to blight Israel. But then again, Iran was the second Muslim-majority country to identify Israel as an independent state after Turkey. Iran also supported Israel numerous times in the past before the Iranian revolution and vice-versa. India can mediate between India and Israel to settle long-standing disputes. Although, mediating for this cause will also pose a number of challenges for India. The mediation in settling the dispute between Iran-Israel will be a real test of Modi's diplomacy. For the moment, it seems like a quixotic idea but it could become a reality under Modi’s regime.

The writer is an Associate Fellow in New Delhi-based Pahle India Foundation


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