Foreign Policy Watch: India-Iran

5 ways India could be affected by U.S. decision to pull out of Iran nuclear deal


Mains Paper 2: IR | Effect of policies & politics of developed & developing countries on India’s interests, Indian diaspora

From UPSC perspective, the following things are important:

Prelims level: Joint Comprehensive Plan of Action (JCPOA), Chabahar, INSTC, Shanghai Cooperation Organisation, “2+2” dialogue

Mains level: Changing dynamics of US international policies and its impact on India

The USA pulls out of Iran nuclear deal

  1. U.S. President Donald Trump decided to pull out of the Joint Comprehensive Plan of Action (JCPOA)
  2. The deal itself won’t be scrapped as long as Iran and the other signatories: U.K., France, Russia, China, Germany and the European Union remain committed to it

Impact on India

India could face the impact of the U.S. decision on the deal as well as instituting the “highest level of economic sanctions” in several ways:

  1. Oil prices
  • Iran is presently India’s third biggest supplier (after Iraq and Saudi Arabia), and any increase in prices will hit both inflation levels as well as the Indian Rupee
  • Non-oil trade with Iran may not be impacted as much

2. Chabahar

  • India’s moves over the last few years to develop berths at the Shahid Beheshti port in Chabahar was a key part of its plans to circumvent Pakistan’s blocks on trade with Afghanistan
  • The new U.S. sanctions could slow or even bring those plans to a halt depending on how strictly they are implemented


  • India has been a founder of the International North South Transport Corridor (INSTC) since it was ratified in 2002
  • It starts from Iran and aims to cut right across Central Asia to Russia over a 7,200-km multi-mode network
  • Plans for INSTC sped up after the JCPOA was signed in 2015 and sanctions on Iran were lifted
  • New U.S. sanctions will affect these plans immediately

4. Shanghai Cooperation Organisation

  • India joined the SCO along with Pakistan last year, and both will be formally admitted in June 201
  • This year, Chinese officials say they will consider inducting Iran into the 8-member Eurasian security organization
  • If the proposal is accepted by the SCO which is led by China and Russia, India will become a member of a bloc that will be seen as anti-American
  • It will also run counter to some of the government’s other initiatives, for eg. the Indo-Pacific quadrilateral with the U.S., Australia, and Japan
  • The move may also rile other adversaries of Iran, like Saudi Arabia, UAE, and Israel

5. Rules-based order

  • India has long been a proponent of a “rules-based order” that depends on multilateral consensus and an adherence to commitments made by countries on the international stage
  • By walking out of the JCPOA that was signed by the Obama administration, the U.S. government has overturned the precept that such international agreements are made by “States” not just with prevailing governments or regimes
  • This could also impact all agreements India is negotiating both bilaterally and multilaterally with the U.S., and the government will have to choose its future course factoring in the new U.S. behavior
  • New Delhi will have to consider a new understanding of its ties with Washington in this context, and some of this understanding may be built during the first “2+2” dialogue between Foreign and Defence Ministers of both countries to be scheduled in the next few weeks in Washington
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