Indo-Iran Relations: Impact of Third-party Influence

Introduction

Until 1948 and before the birth of Pakistan, Iran and India shared a long land and sea border and a common geographical link, after India’s independence, the two countries signed a treaty of friendship (Ministry of External Affairs A, 2022). Despite political alignment, Iran–India relations did not improve significantly after the 1979 Islamic Revolution. With events such as the collapse of the Soviet Union, the outbreak of the Afghanistan crisis, India’s growing need for energy, and the growing importance of Central Asian countries to India, the groundwork was laid for closer Iran–India relations. The 2003 visit of the then-Iranian President Mohammad Khatami to India marked a turning point in relations between the two countries. In the final declaration issued by the two leaders, the two countries pledged to upgrade their relations to the level of strategic partnership (Ministry of External Affairs B, 2022). But this agreement was more on the article. Later, Indian Prime Minister Narendra Modi visited Iran in May 2016 and signed a $500 million memorandum of understanding to develop the Chabahar port and invest in the construction of the Chabahar-Zahedan railway, etc. Likewise, Hassan Rouhani reciprocated it with a visit to India in January 2017. The two summit diplomacies, as well as the tripartite agreement between Iran, India and Afghanistan to establish an international transport corridor in Chabahar, are high points in the two countries’ relations in the last decade. Meanwhile, the foreign ministers and other high-ranking officials of the two countries also visited each other several times and expressed their interest in expanding the relations.

India considers Iran as part of its broad definition of the neighbourhood (Quamar, 2022, p. 7). New Delhi views Iran as an important regional power influencing regional and international development. Iran’s geopolitical location is very important in terms of the North-South Corridor (INSTC), the Chabahar Corridor to Afghanistan and Central Asia, and being at the centre of the world’s energy ellipse. For a long time, the general attitude of the Indian people, especially Indian Muslims, has been positive towards Iran. Moreover, the two major Indian political parties, that is, the Indian National Congress and the Bharatiya Janata Party (BJP), have a positive view of Iran. In fact, despite various challenges, Indian leaders have always tried to maintain balanced relations with Iran and the great powers, for example, the US, Russia and so on.

India is the third-largest consumer of energy after the United States, China and Japan (worldometer, 2022a) and in 2022, Iran was the second-largest country in terms of gas reserves (17%) (worldometer, 2022b) and the fourth largest country in terms of oil reserves (9.5%) (worldometer, 2022c). India currently imports 76% of its required crude oil, the fourth largest importer of liquefied natural gas (LNG) in the world (IEA Statistical Review, 2021). Moreover, among all the oil and gas-exporting countries, Iran, both in terms of geographical considerations (Iran’s geographical proximity to India compared to other major owners of energy reserves) and the extent of vast energy reserves it sits on is the best option for a long-term partnership with India. It is noteworthy that considering the substantial increase in environmental pollution resulting from the growing consumption of such fuels as coal and oil, India attaches high importance to the induction of natural gas in its industries. Therefore, Iran ranks as the second in natural gas reserves in the world and would be an important partner for India. However, owing to political considerations, negotiations on a LNG transfer project to India via Pakistan, also known as the ‘Peace Pipeline’, were halted in 2009. Several Indian attempts, such as the Indian consortium (2002), to extract gas from Iran’s natural gas fields in the Persian Gulf, as well as to build a refinery in Iran, also failed. So Iran has side-lined India from the development of the Farzad B gas field (The Times of India, 2021). Since 2018, following American President Donald Trump’s comprehensive sanctions against Iran, Tehran–Delhi relations shrank sharply. India minimised oil purchases from Iran and continued investing in the Chabahar project with minimal resources despite the US waiver. Investing in the North-South Corridor and Chabahar railway transit to Afghanistan and Central Asia, which was supposed to rival China’s Belt and Road Initiative (BRI), also continued with minimum momentum. According to the Iranian Managing Director of the Ports and Maritime Organisation, India decreased its Chabahar investment pledge to $85 million, and actually, ‘only 30% of the 85 million dollars of the amount which Indians were supposed to invest in Chabahar port has been realized’ (ILNA, 2021).

This downtrend is more visible in their bilateral trade data. In 2018–2019, India imported US$12.11 bn worth of crude oil from Iran. However, following the end of the US oil import exemption dubbed ‘Significant Reduction Exemption (SRE)’ period on 2 May 2019, India has suspended crude imports from Iran. The bilateral trade during 2019–2020 was $4.77 billion, a decrease of 71.99% compared to the trade of $17.03 billion in 2018–2019. This downturn worsened, so bilateral trade during the FY 2021–2022 was $1.91, which is a decrease of 9% as compared to $2.10 billion during FY 2020–2021 billion, and from the period April 2022–September 2022, bilateral trade stood at $1.3 billion (Embassy of India in Tehran, 2023). The question that arises here is why India, despite the vast potential benefits of a relationship with Iran, has practically settled for minimal ties with Iran. One reason for this is India’s strategic relationship with other states that are hostile to the Iranian government, including the United States, Israel and Saudi Arabia. The influence of these three countries, as well as the cost-benefit calculations of India in its relations with other countries, has caused the non-actualisation of the vast capacities of Tehran–Delhi relations. Some of those countries, such as Riyadh, may not have directly hindered India from developing relations with Iran but rather achieved this goal by exerting influence. India has recognised that expanding relations with them requires reducing relations with Tehran. The US sanctions and the risk of serious fines by the US politico-judicial system against private companies doing business with Iran have also limited Tehran–Delhi relations. Thus, India, in a calculated move, has decided to maintain distance from Iran.

The article, therefore, examines the role of the following factors in the calibration of Tehran–Delhi relations: India’s strategic needs vis-à-vis the US, Israel and Saudi Arabia and India’s concerns regarding China–Pakistan relations. This article is categorised into four parts: (a) the paradigm shift in India’s Foreign Policy since the dissolution of the USSR, (b) India’s military-security concerns and its proclivity towards the US and Israel, (c) India’s energy and diaspora concerns and its relations with Saudi Arabia and UAE and (d) Iran’s leverage vis-à-vis Pakistan and China.

Paradigm Shift in India’s Foreign Policy: From Nehruism to Pragmatism

From its independence in 1947 till the 1980s, India pursued an idealistic foreign policy guided by Nehruvian principles. Non-alignment, economic self-sufficiency based on import substitution strategy, and struggle against colonialism and imperialism, as the struggle for third-world solidarity were its main foreign policy characteristics (Bahrami Moghadam, 2015, pp. 93–94).

Later, the end of the Cold War, the disintegration of the former USSR, and the emergence of a unipolar world order compelled India to revisit its foreign policy and align it with new global realities. There was a growing consensus in India’s ruling elite that Nehruism was no longer desired in order to meet India’s strategic and economic goals. It was felt that adopting policies that are in line with the only superpower in the world, that is, the US, would be more beneficial for India. Gradually, India liberalised its economy and adopted pragmatism in its foreign policy. Harsh Pant believes that changing the structure of the world order from bipolar to unipolar has restricted India’s freedom of action since the necessity of a unipolar system forced India to align with the United States despite India’s rhetoric of non-alignment (Pant, 2012).

India’s foreign policy since 1991 has been guided by political pragmatism as the country has focused on realising its economic development policies and its emergence as a game-changer in world politics. Hence, India’s post-Cold War foreign policy is more in tune with the English School of International Relations Theory, also referred to as liberal realism, and contains both elements of realism and liberalism, as well as constructivism. Accordingly, in line with the paradigm of liberal realism, India accepts the existing international institutions as rules of the game. It acts according to them, and additionally, adapts itself to the existing international realities, including the balance of power, international law, diplomacy and the system of alliance with the great powers (i.e., the United States); the mechanisms that the English School emphasises (Dunne et al., 2021, p. 141).

This paradigm shift has yielded results as according to some estimates by international financial institutions, India, with a $8,051 billion GDP or 6.7% of the world’s $119 billion GDP in 2020, ranked third after the United States and China in the PPP index (The Economic Times, 2020). Similarly, according to the forecast of the Organisation for Economic Cooperation and Development (OECD), by 2048, India will be the second-largest economic power in the world after China, and these two countries will control half of the world economy (Financial Express, 2022). Hence, although New Delhi tries to have an independent and balanced foreign policy, it adjusts its relations with other countries based on the weight of their political and economic power as well as cost-benefit calculations, and these parameters apply to its relations with Iran. Therefore, given the realities of international politics, India has given weight to countries that secure Indian security, military, high-tech, energy, and trade needs, as well as meet the needs of the Indian Diaspora. Accordingly, Indian grand security concerns are addressed by the US and Israel. Indian energy and trade concerns are met by the Gulf countries, especially Saudi Arabia and the United Arab Emirates. At the same time, India tries to keep up with Iran to alter Chinese and Pakistan threats.

India’s Military-security Concerns and its Proclivity to Turn Towards the US and Israel

In a new world order following the dissolution of the USSR, both India and the US found themselves facing similar challenges, particularly China and terrorism. India, aspiring to emerge as a regional and global power, felt compelled to align itself with the US. The US, too, saw India as a partner in its efforts to contain China. Thus, this convergence of interest brought the two countries together, and since then, their relationship has been growing steadily. In fact, Nicholas Burns, the current US ambassador to China, when he was the former US Deputy Secretary of State, believed that the strengthening of US relations with India in the three previous decades was a great decision made by US national security decision-makers (Burns, 2007).

In March 2000, Bill Clinton became the first President of the United States to visit India since 1978. One year later, the US also lifted all sanctions that were placed on India following its nuclear tests in 1998. In June 2005, the ‘New Framework for the US–India Defence Relationship’ was signed and within a month, on July 18, 2005, both countries signed the ‘Civil Nuclear Cooperation Initiative’ that lifted the US moratorium on nuclear energy trade with India. This deal made India the only nuclear-capable country that had refused to sign the Non-proliferation treaty but was still permitted to take part in nuclear commerce (Council on Foreign Relations, 2022).

In 2007, following its policy of containing China, the US, along with India, Australia and Japan, formed the Asia-Pacific Security Quartet. Since then, all four countries have conducted several joint military exercises. Since 2008, the defence trade between India and the US has also seen an exponential increase, as it reached $20 billion in 2020 (U.S. Department of State, 2021). Thus, it is no surprise that during his visit to India in 2014, President Obama called India a major US defence partner. Similarly, in 2021–2022, the US replaced China as India’s biggest trading partner as the trade volume rose to $119.42 billion against $80.51 in 2020–2021 (Business Standard, 2022).

For New Delhi, the Indo-US-nuclear deal and its implementation in 2008 was significant in a number of ways. First, it brought India out of its international nuclear isolation. It provided India with fuel and nuclear facilities. It also helped India reduce its dependence on Persian Gulf energy resources that included Iran (Blank, 2007, p. 12). During Indian Prime Minister Narendra Modi’s visit to the White House on 29 June 2017, the United States and India reaffirmed their commitment to nuclear cooperation for commercial and civilian purpose. A statement issued by the White House referred to the contract for the construction of six Westinghouse AP1000 reactors in Andhra Pradesh. ‘Once completed, the project will provide reliable electricity for millions of Indian citizens, the statement read’ (World Nuclear News, 2017, p. 2)

US’s pressure, along with its strategic and economic incentives that included the 2005 Framework for a civil nuclear deal, led India to distance itself from the IPI gas pipeline project, which India had joined in 1999 despite the significant benefits it could gain had the project materialised. The Bush administration felt that the IPI project would help Iran both politically and economically and further strengthen it to carry out its so-called terrorist activities in the region (Pant, 2009, pp. 83). In 2008, Iranian President Mahmoud Ahmadinejad travelled to India in an effort to revive the agreement but by then, India was inclined towards joining Turkmenistan–Afghanistan–Pakistan–India, a gas pipeline project that was supported by the US.

Another indication of India’s alignment with the US position against Iran was its agreement with three International Atomic Energy Agency (IAEA) Board of Governors votes to refer Iran’s case from the IAEA to the UN Security Council between 2005 and 2009. It is assumed that since the United States was at the forefront of confrontation with Iran over its nuclear programme, as a result, it ensured that India too complied with US policy as it was a time when the civil nuclear agreement between the US and India was in the process of being finalised and passed by the US Congress.

There were other indications of India’s growing inclination towards the US, too. In 2009, Iran secured 10 % of its gasoline consumption from India. However, in April 2010, India decided against exporting gasoline to Iran on the pretext of price issues—an excuse that was in complete contradiction to the agreement between the two countries. Additionally, there was a drastic reduction in the purchase of Iranian crude oil. India also insisted that issues related to energy trade with Iran should be settled outside the Asian Clearing Union. This resulted in an approximately $5 billion loss to Iran for the oil already bought by Indian companies. On Iran’s threat of cancelling all deals, India agreed to pay two-thirds of the money through the German-based Europaisch Iranische Handels bank in February 2011 (The Economic Times, 2011). For American policymakers, weakening ties between Iran and India essentially meant weakening Iran politically and economically and preventing it from developing its nuclear programme (The New York Times, 2012). As a result, Iran’s oil exports to India fell from about 20% in 2009 to about 10% in 2013 (Prentice Caves III, 2019).

In another instance, the Indian Oil and Natural Gas Corporation (ONGC) Company and Hinduja Group jointly won a contract worth billions of USD for the development of 40% of the 12th phase of Iran’s largest gas field, for example, South Pars in 2012 (Business Standard, 2013). However, these companies were unable to obtain the necessary funding from the relevant banks due to US sanctions against Iran. The backtracking of Indian companies from developing Farzad A and B gas fields was another instance which ultimately forced the Iranian authorities to agree to allow local Iranian and Russian companies to develop these fields (Times of India, 2021). Interestingly, despite backtracking from the agreement, Indian companies have been seeking compensation from Iran (Outlook India, 2020).

By 2018, Indian insurance companies refused to insure ships carrying Iranian oil (Reuters, 2018). According to the Indian Ambassador in Washington, following Trump’s announcement of comprehensive sanctions against Iran, Indian companies even refused to buy Iranian oil since 2019 (Business Standard, 2019). India is the third largest importer of oil in the world, and 80 % of its oil needs are met from abroad (BBC News, 2022). Hence, the country has turned to countries like Saudi Arabia and Iraq to compensate for Iranian oil. Interestingly, India has also decided against buying oil from Venezuela—again under US pressure (Business Standard, 2019). Furthermore, the trade volume between India and Iran, which stood at 17 billion in 2018, was around $4.77 billion in 2020 (India Briefing, 2021).

India not only reduced its oil imports from Iran, but it has also been expanding its energy ties with the United States. The US was the fourth largest exporter of crude oil to India after Iraq, Saudi Arabia and UAE. Oil exports from the US and Canada combined brought the share of America at roughly 20% of India’s total oil imports at 736,000 bpd in 2021 (Seshasayee, 2022). In 2018, India signed a 20-year long-term contract with the US to import 3.5 tonnes of LNG per year (The Indian Express, 2018).

The Chabahar port project, which was envisaged as a bridge between India, Iran, Afghanistan and Central Asia, was hailed as India’s strategic win in the region (Figure 1). However, due to strict US sanctions, India slowed down the project. It delayed the release of funds for the project—half a billion dollars for the Chabahar port and around one and a half billion dollars for the Chabahar railway and post-construction infrastructure, which it had earlier committed to. So far, only one credit line of $85 million has been allocated, which was not used until January 2021 (Tasnimnews, 2021). Despite the fact that the US has waived the Chabahar project from the US sanctions regime, India has yet to invest the promised budget into it. In view of this situation, in July 2020, Iran decided to start the project alone with the help of its domestic companies (Haidar, 2020). In other words, Chabahar Port became the victim of geopolitical rivalry between Iran and the US (Haji-Yousefi & Narouei, 2021, p. 81). In fact, the repeated delay has led to the contemplation of the Iranian government handing over the development of Chabahar port to Chinese firms (Anadolu Agency, 2020).

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Figure 1.

Source: Behuria and Rizvi (2015, p. 5).

The neoliberal-oriented ruling elite in India, as well as the clout of the Indian Diaspora in the USA, has ensured that India remains predisposed towards the United States vis-à-vis Iran. In their opinion, India’s relationship with the USA is far more advantageous as compared to relations with Iran. Also, as per some estimates, the Indian diaspora in the USA is the most successful and influential immigrant minority. Many of them in American academic circles pursue India’s interests by promoting joint Indo-US security discourse. In 2017, Indian migrant workers around the world sent more than $11.7 billion to India (Forbes, 2019). In the 2021–2022 academic year, more than 200,000 Indian students enrolled in American universities (American Bazaar, 2022). These variables show the importance of relations with the USA as compared to Iran for India.

With the end of the Cold War and the disintegration of the erstwhile USSR, India had lost a reliable source of arms supply and an ally on the diplomatic front. Israel, on the other hand, desired to end its isolation and viewed India as an important and emerging economic power in Asia, with a strong Muslim population as its biggest minority. Hence, on 29 January 1992, India announced the establishment of full diplomatic relations with Israel (Hindu, 2022). With Narendra Modi’s ascent to power as Prime Minister of India in 2014, the relationship between India and Israel achieved new heights. Modi became India’s first-ever Prime Minister to visit that country. Greeting his Indian counterpart, Netanyahu had said, ‘We love India; we admire your culture and democracy…we have been waiting for you for seventy years’, to which Modi responded, ‘your heroes are an inspiration for the younger generations’ (The Times of India, 2017). Similarly, during the 2021 COP 26 Climate Summit, Israeli Prime Minister Naftali Bennett met Modi and called him ‘Israel’s most popular man’ (India TV News, 2021). The trade volume between India and Israel has increased from $200 million in 1992 to more than $7.86 billion in 2021–2022, excluding trade in the defence sector (Embassy of India in Israel, 2022). The two countries are also expected to finalise a Free Trade Agreement in the near future. According to the Stockholm International Peace Research Institute (SIPRI), in 2021, India purchased 13% of its weapons from Israel. India is also Israel’s largest arms importer, accounting for 43% of Israel’s exports from 2015 to 2020, which made India the third largest importer of Israeli weapons, following Turkey and China (SIPRI, 2021). Given the acrimonious relationship between Iran and Israel, it is natural that the growing relationship between India and Israel caused much uneasiness in Tehran. India’s proximity to Israel is being viewed in Tehran as India’s moving away from Iran. Although, India dismisses all such concerns and insists that its relations with Israel are not related to its relations with Tehran.

Iran feels that Israel is not only encouraging India to distance itself from Iran but has also been insistent on India joining the campaign against Iran in the Middle East. In fact, Israel is seeking to steer the newly formed I2U2 (India, Israel, USA and UAE), which is also being called the ‘New Quad’ against Iran. Some Israeli officials and scholars have been arguing that the Middle East problem is no longer an Arab–Israel conflict. It is, on the contrary, a Shiite–Sunni dispute, or, to be more precise, an Arab-Iranian dichotomy, and therefore, India does not need to worry about its expanding relations with Israel (Wald, 2017, p. 4). Irrespective of the validity of the argument, the signing of Abraham Accords would indeed encourage India to move further towards Israel and away from Iran. As Sanjay Singh has argued, given the fundamental political changes in the Arab World, especially after the Abraham Accords, Arab nations are no longer sensitive to the growing relations between Delhi and Tel Aviv (Prasad ‎& Rajiv, 2020, pp. 96–102).

India’s Energy and Diaspora Concerns and Its Relations with Saudi Arabia and the Gulf Countries

Today, India is Saudi Arabia’s fourth-largest trading partner, following China, the USA and the United Arab Emirates. In 2021–2022, the bilateral trade between the two countries stood at $42 billion (Embassy of India in Riyadh, 2022). In an effort to maintain a growth rate of 7%–8%, India increasingly needs to ensure an uninterrupted supply of energy resources. Saudi Arabia, on the other hand, is rich in energy resources and has the world’s second-largest oil reserves. It, therefore, is not surprising that India increasingly looks towards Saudi Arabia to meet its energy needs. India currently imports 18% of its oil and 22% of its annual LPG from Saudi Arabia (Embassy of India in Riyadh, 2022). Additionally, Saudi oil giant Aramco, or officially the Saudi Arabian Oil Group, has also invested $40 billion to build a refinery in India (WSJ, 2018). Furthermore, Indians, both temporary immigrants as well as those who are Saudi permanent residents, make up around 10%–13% of the Saudi Arabia population and, with 2,594,947 people, are accounted as the largest community of expatriates in Saudi Arabia (Ministry of External Affairs C, 2022). According to the Pew Research Centre, Saudi Arabia stood as the third big source of remittance to India in 2017, with $11.239 billion (PEW, 2017).

Thus, establishing close relations with Saudi Arabia has served India’s purpose in several ways per its post-Nehruvian foreign policy paradigm. Saudi Arabia is rich in money and energy as well as an influential player in the Arab World and GCC, which makes it preferable to India vis-à-vis Iran. Therefore, India’s relations with Saudi Arabia have had a negative impact on its relations with Iran. Both Iran and Saudi Arabia are competing with each other for dominance—both ideological and economic in the region. Both Saudi Arabia and Iran are oil-exporting countries, and they also follow two entirely different schools of thought on Islam (Taheri & Bayat, 2018, p. 206). Although India expresses an impartial balanced policy towards both rival regional powers, India’s practical policy has inclined Riyadh further.

With US sanctions on Iran, Indian companies found it increasingly hard to cooperate with Iran, which led to India’s growing reliance on Saudi Arabia along with Qatar and Kuwait to meet its energy demands. For example, India–UAE trade, which was valued at $180 million in the 1970s, has increased to $73 billion, which makes UAE India’s third largest trading partner in 2021–2022 (Embassy of India, Abu Dhabi, 2022). UAE is seventh biggest investor in India in terms of FDI. Additionally, there are an estimated 3.5 million Indians residing in UAE, which was responsible for an 18% share in India’s total inward remittances in 2020–2021, making UAE (Bag, 2023). As a result, Iran’s position as the second largest oil exporter to India in 2009–2010 fell to a level that it was not even among the list of top 20 countries in 2020 (Powell et al., 2022). India, by turning towards Gulf countries, particularly Saudi Arabia, has helped the US secondary sanctions against Iran to be effective. Since India shares very close relations with Israel, it is feared that following the signing of the ‘Abraham Accords’, Saudi Arabia too will join hands with India and Israel against Iran. In this connection, in a recent interview with Atlantic Magazine, Crown Prince Muhammad Bin Salman has already expressed his desire to engage with Israel saying, ‘we do not view Israel as an enemy. but rather as a potential ally in the many interests that we can pursue together. but some issues must be resolved before we can reach that’ (Bloomberg, 2022). This position expressed by the Saudi prince was unthinkable only a few years back. In case Saudi Arabia goes ahead with accepting the state of Israel and establishes a cooperative relationship, Iran would further find itself in a difficult situation.

Iran’s Leverage vis-à-vis Pakistan and China

Pakistan is yet another important determining factor in Indo-Iran relations. Historically, Iran maintained close brotherly relations with Pakistan, whereas India and Pakistan are not only acrimonious towards each other but both countries have fought three full-scale wars and came close to fighting yet another war in 1999.

Following the partition of India into two independent States, India and Pakistan, Iran became the first country to recognise Pakistan (Ministry of Foreign Affairs, Pakistan, 2022). Both countries share deep-rooted historical, religious and cultural linkages, as is evident by the fact that Pakistan’s national anthem is written in Persian instead of Pakistan’s national language, Urdu. Iran and Pakistan signed a Friendship Treaty on 18 February 1950 (United Nations Treaty Collection, 2022). Pakistan’s first Prime Minister, Liaquat Ali Khan, paid a visit to Iran in May 1949, which was soon reciprocated by the Shah of Iran as the first foreign head of state to visit Pakistan in March 1950. Both countries were part of CENTO and allied with the USA during the Cold War.

With the end of the Cold War, the worsening crisis in Afghanistan, and Iran’s Islamic revolution, Iran and Pakistan found themselves in opposite camps. It was also the time when India decided to make a rapprochement towards Iran. Besides the situation in Afghanistan and its energy needs, India’s rapprochement was aimed at countering Pakistan’s relations with Iran. Subsequent years saw Iran’s position on Kashmir changed as it declared Kashmir to be India’s integral part of its internal matter (Ahmed & Bhatnagar, 2018).

However, as has been mentioned earlier, as the relations between India and Iran grew cold, much to the disappointment of India, Iran has, once again, started to raise its concerns regarding the human rights situation in Indian-administered Kashmir. Iran has also been criticising India over the human rights of Indian Muslims as well. Following the violence in Delhi in 2020, the Iranian Supreme leader Ayatollah Khamenei tweeted,

The hearts of Muslims all over the world are grieving over the massacre of Muslims in India. The government of India should confront extremist Hindus and their parties and stop the massacre of Muslims in order to prevent India’s isolation from the world of Islam. (Economic Times, 2020)

This situation presents Pakistan with an opportunity to re-energise its relations with Iran and win the support of an important Islamic country for its position on the Kashmir dispute.

On the other hand, India considers China as its serious competitor in the Indian Ocean and Persian Gulf, so China’s staunch support to Pakistan made Delhi sensitive to Beijing’s strategic intentions (Southerlan et al., 2014, p. 7). China’s investment in Pakistan’s Gwadar port has caused India to seriously pursue the Chabahar port development in Iran in order to counter Beijing’s so-called strategic blockade (Heidari & Ghorbani, 2022, pp. 47–74).

India’s compliance with US sanctions against Iran since 2018 has persuaded Iran to lean more and more towards countries like China and Russia. Beijing has preserved its trade relations with Iran even after the imposition of US sanctions on Iran. Since US sanctions forced India to reduce its commercial relations with Iran, a vacuum is created in Iran’s geopolitical relations, which China can potentially fill. Beijing has been the largest buyer of Iranian oil during the period when Iran faced sanctions (Honrada & Ranjbar, 2020, p. 3). On 27 March 2021, Iran and China struck a 25-year strategic partnership agreement that includes trade, culture and security. This document has strategic implications for India. In addition, there is a possibility that China could deploy troops or warships to protect its expanding interests in the Middle East (Heidari & Ghorbani, 2022, pp. 47–74). In the Iran–China Strategic Partnership Agreement, there are provisions that allow China to deploy 5000 military forces to protect Chinese workers and experts in Iran. In 2019, China, Iran and Russia conducted naval exercises in the Gulf of Oman (Honrada & Ranjbar, 2020).

Such a situation has significant adverse strategic consequences for India. If India’s procrastination towards Iran continues, and on the other hand, the strategic partnership between China and Iran continues to grow, India will find itself surrounded by China’s presence in Gwadar port in Pakistan, Hambantota port in Sri Lanka and the China–India border in the Himalayas. Losing Iran means losing potential road access to Afghanistan and Central Asia. Strategically, it means leaving the geopolitical playing court to China. To counterbalance China’s growing presence in Iran, India has expanded cooperation with the Persian Gulf states. It has signed security and defence agreements with Saudi Arabia, the United Arab Emirates, Oman and Qatar. Therefore, continued stagnation in India–Iran relations would work to China’s advantage (Moonakal, 2022). Therefore, India’s strategic concerns necessitate that it does not lose the leverage it has vis-à-vis Iran and submit to its strategic rivals.

Conclusion

India is an emerging economic-political power that desperately needs oil and gas. On the one hand, India seeks to contain China and Pakistan, for which it needs Iran. On the other hand, it wishes to establish a balanced relationship with Iran and the powers hostile to Tehran. Furthermore, Iran is an important country for India both in energy and as a transit route. Iran definitely has the potential to become an important political and economic partner of India. Nonetheless, due to the political influence and pressure of the United States, Israel and Saudi Arabia, as well as its owns cost-benefit calculations, India has been unable to activate the potential nor maintain optimum relations with Iran. India’s foreign policy after the Cold War, especially at the beginning of the third millennium, shifted from the Nehruvian idealism to pragmatism. Therefore, India considers the benefits of expanding relations with the United States, Israel and Saudi Arabia to be greater than the costs of developing relations with Iran. In addition, much of India’s economy is run by the private sector, which is highly vulnerable to secondary US sanctions against Iran. Therefore, India has kept its relations with Tehran largely limited due to the changing foreign policy paradigm as well as domestic and international constraints.

However, India’s continuous policy of indifference has created space for the possibility of other countries, such as China, to step in. While Iran was struggling with severe sanctions imposed by the Trump administration as well as the Corona pandemic in 2019–2021, India left Iran alone, and it was China that continued to purchase minimal Iranian oil and continued exporting basic goods to Iran. Beijing also has supported Iran in the international community as well by concluding a Comprehensive Strategic Partnership with Tehran in 2021 (Diplomat, 2021). It also facilitated Iran’s membership in the Shanghai Cooperation Organisation and BRICS. The following measures may be considered by New Delhi in order to restore trust and reset the bilateral relations between Tehran and New Delhi:

There has been a long stall in the two countries’ bilateral geopolitical and economic relations. Summit diplomacy between heads of the two states can reinvigorate the ongoing weak stamina in bilateral relations.

All of the above measures require a strong political will from both sides.