Will They, Won’t They?: India’s Iran Policy

The Iran question comes back to India’s doorstep every few years. This time it is in the form of the fear that New Delhi is losing its hold over Iran. To make matters worse, this hold seems to be taken over by India’s fiercest rival in recent times, the People’s Republic of China. China’s expansion, both in territory and in influence, has been a growing concern for India. Both states have been vying for primacy in the South Asian region for many decades. By recently excluding India from the Chabahar rail link project at the same time when it was signing a partnership with China, Iran has raised many questions for the future of the India-Iran relationship.

The Chabahar Chronicles

Chabahar port and the Rail link to Zahedan hold great significance in India’s foreign policy. Firstly, it provides a much-needed solution for trade with Central Asia. It is not possible to secure a land route for trade through Pakistan. Chabahar port, in the Gulf of Oman, is a mere 1,400 km from Mumbai’s coast. The proposed Rail link would be a way to connect to Afghanistan and subsequently, the rest of Central Asia as well as Russia.

Secondly, this port was strategically important from the point of view of trade as well as to counter the presence of China in this coastal region. China has helped in the development of the Gwadar Port on Pakistan’s coastline not too far from Chabahar. Thus, the wider context of Chabahar must be kept in mind.

In 2003, India and Iran signed the New Delhi Declaration. In this agreement, both countries had decided to jointly develop the Chabahar Port Complex on the coast of Iran. This port development was exempted from sanctions levied by the USA on Iran after a special request by India. In the past few years, India’s investment in the port complex has paid off as it had been operating one whole terminal of the complex. Since December 2018, 82 ships and almost 1,200,000 tons of bulk cargo have been handled through this terminal.

After the success of this project, a contract was signed in 2016 to develop the 628 km long Chabahar-Zahedan railway link along the Iran-Afghanistan border. IRCON, a Government of India undertaking under the Ministry of Railways, was appointed by India to gauge the feasibility of the project. They were to work with the Iranian Construction and Development of Transportation Infrastructures Company (CDTIC). After the site inspection and review of the feasibility report, some outstanding financial and technical issues still remained and the project was stalled for a while.

However, Iran started the project in July 2020 without the inclusion of India. Although Iran eventually clarified that India could join at a later stage, a ray of distrust shone through the project. Additionally, this confusion occurred just as Iran and China were signing an economic and strategic partnership.

This $400 billion deal was approved by the Iranian cabinet in June 2020. The partnership will vastly expand Chinese presence in banking, telecommunication, ports, railways and dozens of other projects. In exchange, China will receive a regular and heavily discounted supply of Iranian oil over the next 25 years. The document also describes deepening military cooperation. The military partnership would include joint training and exercises, joint research and weapons development, and intelligence sharing. This would give China a foothold in a region that has been a strategic preoccupation of the United States for decades.

The China-Iran Agreement is also set to include a major port development project on the Strait of Hormuz. The oil transit line at the Strait of Hormuz is strongly held by Iran and is an important maritime chokepoint for the world. If this chokepoint comes under the influence of China, it may set the stage for a global shift in power by threatening the oil supply of the entire world.

Farzad B Gas Field

Another similar incident occurred in relation to the Farzad B Gas Field located in the Persian Gulf. The contract for exploration of this field was signed by an Indian Consortium comprising ONGC Videsh, Oil India and Indian Oil Corporation. This contract expired in 2009 after the commerciality of the field was based on gas discovery. Since this discovery, the consortium consistently made efforts to secure a deal for the development of the field. By 2018, 75% of the deal was finalised.

However, in 2019, the US withdrew from the Iranian Nuclear Deal. In earlier instances of sanctions, India had still stood strong on certain points of trade with Iran. However, after the 2019 sanctions, India almost zeroed out on oil imports from Iran. It also slowed down the funding of the various infrastructure projects. Even though India managed to secure the exemption of the Chabahar Rail link project, they were unable to execute their duties in time.

Iran was apprehensive of trusting India after they readily complied with the US sanctions. In January 2020, India was informed that Iran would unilaterally develop the field in the near future. Again, they said that India would be included in the project at a later stage. Indian companies had invested millions of dollars in the gas discovery stage, only to be ousted at the development stage.

A Re-evaluation of Policy

Both these incidents point to a recurring problem. It seems that India’s conduct with other countries is highly dependent on the actions of two powers - the US and China. India needs to re-evaluate its priorities in terms of its foreign policy. The collaborative projects with Iran could have been of great benefit to India’s economy. The recalibration of relations with Iran is in the best interest of India.

In fact, the process of reconciliation seems to have begun. Within the span of 3 days in September 2020, two of India’s high ranking ministers visited Tehran. Indian Defence Minister Rajnath Singh’s visit was related to security in the Persian Gulf and potential military cooperation between the states while Indian External Minister S Jaishankar’s visit was related to securing an Indian interest in Chabahar.

The issue at hand brings the memory of the world order during the Cold War, where developing states conducted their relations with each other while the Union of Soviet Socialist Republics (USSR) and the USA loomed in the background. They were forced to pick a side and many potential alliances were thwarted in this way. In this situation, it might be wise to look back at our nation’s first Prime Minister, Jawaharlal Nehru, and his undying determination for India to have an independent foreign policy. He was a founding member of the Non-Aligned Movement (NAM) which, although still in existence, has fallen out of the mainstream after the collapse of the USSR. It may be time for a revival of NAM so that countries like India and Iran can engage in activities of mutual benefit without looking over their shoulders every step of the way.


Ritisha Gupta

A Political Science student from Delhi University. Hoping to make a difference, one step at a time.

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