Context

• The sudden demise of Iran's President Ebrahim Raisi in a helicopter accident on May 20 has added a new layer of uncertainty to an already volatile region.
• While this incident is significant, it is unlikely to cause any major shifts in Iran's domestic or foreign policies due to the overarching authority of Supreme Leader Ayatollah Ali Khamenei.
• Nevertheless, this development provides an opportunity to examine the current state and future prospects of India-Iran relations, especially in light of recent geopolitical manoeuvres.

An Overview of India-Iran Relations

• Historical Context
  • India and Iran share a long history of cultural and economic ties that date back to ancient times.
  • The relationship between the two civilisations has been marked by mutual influence in areas such as language, culture, and trade.
  • In the modern era, post-1947 India and Iran established diplomatic relations soon after India gained independence.
  • Throughout the Cold War, despite aligning with different blocs, India with the Non-Aligned Movement and Iran under the influence of the United States, the two countries maintained a relatively cordial relationship.
  • The Iranian Revolution of 1979, which led to the establishment of the Islamic Republic, marked a turning point.
  • Despite Iran's shift in ideological orientation, India continued to engage with Iran, emphasising the importance of regional stability and economic cooperation.
• Economic and Energy Ties
  • One of the cornerstones of India-Iran relations has been energy cooperation and Iran, endowed with vast reserves of oil and natural gas, has been a critical supplier of energy to India.
  • India, with its growing economy and energy needs, has relied on Iranian oil to meet a significant portion of its energy requirements.
  • The relationship reached new heights in the early 2000s with the negotiation of long-term oil supply agreements and discussions on pipeline projects like the Iran-Pakistan-India (IPI) gas pipeline.
• Strategic and Geopolitical Considerations
  • Geopolitically, India has viewed Iran as a pivotal player in the broader West Asian region.
  • The two countries have found common ground on several issues, including the stability of Afghanistan.
  • Iran's geographical location offers India a gateway to Central Asia and beyond, bypassing Pakistan.
  • This strategic advantage was a key driver behind India's investment in the Chabahar port, which aimed to enhance connectivity to Afghanistan and Central Asia.

Recent Developments and Their Impact on India-Iran Relations

• The Abraham Accords and Regional Realignment
  • The Abraham Accords, brokered by the US in 2020, further complicated the regional dynamics.
  • These agreements, which normalised relations between Israel and several Arab states including the UAE and Bahrain, have been seen as part of a broader US strategy to counter Iran's influence in the region.
  • India's enthusiastic participation in the I2U2 grouping (India, Israel, the UAE, and the US) indicates its alignment with this strategy.
  • This alignment has been perceived by Iran as a pivot away from traditional bilateral cooperation.
• India-Middle-East Economic Corridor (IMEC)
  • The announcement of the IMEC project during the G20 summit in New Delhi in 2023 represents another significant development.
  • This project, which includes a shipping and rail link connecting India with Israel via the UAE and Saudi Arabia, is seen as a strategic bypass of Iran.
  • The IMEC highlights India’s commitment to integrating itself into the emerging economic and strategic frameworks of West Asia, potentially at the expense of its traditional engagements with Iran.
• Impact of US Sanctions
  • The re-imposition of US sanctions on Iran following the Trump administration's withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in 2018 significantly impacted India-Iran economic relations.
  • The sanctions led to a dramatic reduction in India's oil imports from Iran, forcing India to seek alternative suppliers.
  • This development strained the economic aspect of the bilateral relationship, although India continued to express its interest in the Chabahar port project.

Revival of Chabahar Project: Strategic Significance and Challenges

• Strategic Significance
  • The Chabahar project is a pivotal component of India’s regional connectivity and strategic framework.
  • Located on the southeastern coast of Iran, the Chabahar port offers India direct access to the Arabian Sea, providing a strategic alternative to Pakistan's Gwadar port, which is part of China’s Belt and Road Initiative (BRI).
  • Chabahar port enhances India’s geopolitical leverage in the region by providing a vital link to Afghanistan and Central Asia.
  • This connectivity bypasses Pakistan, which has historically denied India overland access to Afghanistan.
  • The port is envisioned as a hub for economic activity, aiming to boost trade and investment between India, Iran, and Afghanistan.
  • The development of this port is crucial for India to tap into the resource-rich markets of Central Asia and increase its trade footprint.
  • Chabahar serves as a counterbalance to China’s Gwadar port in Pakistan, located merely 72 kilometers away.
  • By developing Chabahar, India seeks to provide an alternative route for regional trade, thereby reducing the strategic dominance of China and Pakistan in the region.
• Challenges Despite Strategic Significance
  • The US sanctions have deterred international investment and complicated financial transactions necessary for the port’s development.
  • The political landscape in Afghanistan has changed drastically with the Taliban's return to power.
  • The original tripartite agreement involving India, Iran, and Afghanistan was underpinned by the stability provided by the US-supported Ghani regime.
  • The economic viability of Chabahar is contingent on the stability and cooperation of the surrounding region.
  • Persistent geopolitical tensions, coupled with Iran’s economic struggles under sanctions, pose significant risks to the long-term sustainability of the project.

Future Prospects for India-Iran Relations

• Need for a Multifaceted Foreign Policy
  • The Chabahar project exemplifies India’s pursuit of strategic autonomy, allowing it to navigate complex geopolitical landscapes while asserting its regional influence.
  • By balancing its relations with Iran, the US, and other regional players, India aims to maintain a multifaceted foreign policy that serves its broader strategic objectives.
• Leveraging International Partnerships
  • India might explore leveraging its international partnerships to mitigate the impact of US sanctions.
  • Engaging with the EU, which has expressed interest in regional stability and connectivity, could provide additional diplomatic and economic support for the project.
  • Furthermore, India’s deepening ties with countries in Central Asia could enhance the economic prospects of the Chabahar port.
• Humanitarian Aid and Diplomatic Engagement
  • India’s continued engagement with Afghanistan, including humanitarian aid, indicates its commitment to the stability and connectivity of the region through Chabahar.
  • Maintaining a presence in Afghanistan, despite the lack of formal recognition of the Taliban regime, highlights India's strategic foresight in using Chabahar as a critical node for regional diplomacy and economic activity.

Conclusion

• The death of Iran’s President Ebrahim Raisi introduces an element of unpredictability in a region already fraught with tension.
• For India, the challenge lies in balancing its strategic interests between competing regional powers while navigating the intricate web of international sanctions and geopolitical rivalries.
• The revival of the Chabahar project amidst these challenges reflects India’s strategic dexterity but also underscores the fragile nature of its regional engagements.