Domestic Economy

Iran-India Interactions Buoyed by Geoeconomics

Iran-India Interactions Buoyed by Geoeconomics
Iran-India Interactions Buoyed by Geoeconomics

Potentially, Indo-Iranian relations can be far-reaching and multidimensional, as Tehran’s geographical location helps extend New Delhi’s geopolitical outreach and India's vision can make Iran a regional hub for transit and trade, a Brookings study by Kadira Pethiyagoda assessed in 2018.
However, both sides have been unable to derive full benefits due to New Delhi’s relations with Washington and Tel Aviv, and now Iran’s partnership with China, reads part of an article published in Al-Monitor. Excerpts follow:
Another setback in Indo-Iran collaborations has been the breakdown of the Joint Comprehensive Plan of Action talks. 
With Iran's Chabahar Port lying in limbo due to the sanctions on Tehran, long-term Indian ambitions for regional connectivity and trade have been badly affected. Not only was Chabahar supposed to compete with Pakistan’s Gwadar Port, a flagship project of the China-Pakistan Economic Corridor, it was also intended to be the main node of a transportation network connecting India to Afghanistan, Central Asia, Russia and Europe. 
Expecting some progress in JCPOA talks, New Delhi had allocated 1 billion rupees ($12.1 million) in its 2023-24 budget for the Iranian port. But if the JCPOA is not revived, Chabahar may become a forgotten chapter in Indo-Iranian ties. 
In addition, the sanctions affected New Delhi’s energy security, as Iran used to be its second largest oil supplier. Since mid-2019, India completely stopped buying Iranian oil, but it continued to source oil from Russia despite sanctions after it attacked Ukraine. 
Afifeh Abedi, a researcher on Iran’s foreign policy in Tehran, noted that the relationship between India and the US has also made Indo-Iranian ties more complex. 
"It seems that China has [also] been added to the factors affecting Indo-Iran relations, but now the completion of several geoeconomic projects is in the interest of both countries,” she said. 
Also, Iran may view the I2U2, a new coalition linking India, Israel, the US and the UAE, with suspicion. Focusing on maritime security, infrastructure, transport and trade, the four-member group is similar to the Quad while it furthers the vision of the Abraham Accords with economic development. 
Advancing New Delhi’s Middle East Policy, the I2U2 can prove to be an alternate option to its geoeconomic initiatives with Iran.
Finally, India and Iran have had a defense pact, the New Delhi Declaration, since 2003, but their strategic cooperation has been at a low level, even though both countries could have played a significant role in stabilizing Afghanistan.  
Tehran’s 25-year comprehensive strategic partnership with China has pushed New Delhi even further in the background. 
According to unofficial reports, Tehran has recently offered a China-style 25-year deal to New Delhi as well. But wishing to move ahead with the China deal, Iranian President Ebrahim Raisi recently visited Beijing for a further upgrade in Sino-Iran relations. 
According to Ashok Swain, professor of peace and conflict research at Uppsala University in Sweden, India’s relations with Iran are complicated, to say the least. 
“While India wants to maintain a cooperative relationship with Iran to create a front vis-a-vis Pakistan-Afghanistan in the region, it is also increasingly worried about Iran’s alliance with China. India is also under pressure from the US against any cooperation with Iran,” he said.   
Having established six border markets, Iran is also promoting barter trade with Pakistan and it will be providing uninterrupted electricity to Gwadar Port. 
But notwithstanding all the contradictions, Iran’s annual exports to India spiked by 60% in 2022. Only last week, the Iranian Foreign Ministry held a session on economic ties, in which the participants “underlined the importance of India in Iran’s foreign policy.” 
India's Foreign Ministry spokesperson, Arindam Bagchi, did not respond to requests for comment. 

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