US shadow over India Iran relations -RSTV Summary

Anticipating increasing tensions between Iran and the US, the Government has apparently advised Indian firms to go slow in investments in proposed projects of Iran’s Chabahar’s free trade zone. According to a news report, there is an apprehension that India’s financial transaction and technology imports in the rest of the world could be jeopardized if India gets caught in the crossfire between US and Iran. With this development, the future of a slew of gas based projects like urea, petrochemical, steel plants etc in the Chabahar free trade zone also seem to be in doubt. These projects have been announced after the Obama administration lifted sanctions against Iran in January 2016. Earlier, India had agreed to develop two berths at the Chabahar port as well, after signing a MoU with Iran on May 6th, 2016. India believes that the Chabahar port is of great strategic importance as a maritime trade transit route to Iran, Afghanistan and Central Asia. 

 

Analysis:

 

  1. India is blocked in terms of transit to Afghanistan due to Pakistan and it is least expected that Pakistan would lift restrictions for India because this would mean giving easy access to India in Central Asia. Therefore, the alternative is to develop a route through Iran as it will be strategically the shortest route to Afghanistan and Central Asia. It will also reduce Afghanistan’s dependence on Pakistan as a route to access India.

 

  1. India will need to consider the prevailing tensions between Iran and the United States to secure its investment and strategic interests in the region specifically the investments made in areas such as petrochemicals. Financial sanctions against Iran by the US earlier made it quite difficult for India to invest in Iran for the port development process as well.

 

  1. Complex foreign investment regime of Iran is also a factor that makes Indian strategic involvement in the country a little troublesome task.

 

  1. US sanctions against Iran were imposed against Iranian companies, entities that supported extremism and individuals which were involved in the missile programme. India has nothing to do with the Iranian involvement in either missile programmes or support to extremist organizations. Therefore, it is unlikely that India will be affected by American sanctions.

 

  1. China is also involved in Chabahar and is building an oil refinery in that region. It has already made an offer to Iran to build Chabahar as China considers it as an important link to its ‘One Belt, One Road’ initiative. China is not worried about the American sanctions against Iran. Iran would like China to play an important role in Chabahar as this is the way of the dual-use policy of Iranian diplomacy.

 

  1. India must consider this important development and try to efficiently navigate its ways to secure its interests in the region. India cannot afford to lose Chabahar only by anticipating future American sanctions against Iran. Iran itself is not too enthusiastic about Chinese involvement in Chabahar because they have ruined the oil fields of Chabahar by using their inferior technology and the imperialist ways of business operations by China. Therefore, Iran is definitely looking forward to India.

 

Conclusion: 

As the policy of President Trump on Iran unfolds itself in days to come, India should wait cautiously over the next few months to see how it turns for India’s engagement in Chabahar. With Iran, India should try to grasp strategic opportunity while being cautious about it at the same time. This might help it to maintain a balanced approach for future.

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