Foreign Policy Watch: India-Middle East

Costs of neglecting new Arabian business


From UPSC perspective, the following things are important :

Prelims level : Arab Countries

Mains level : Paper 2- India-Arabian countries, balancing relations with Iran

The article contrasts the over-emphasis put on the ties with Iran with the neglect of ties with Arab countries in India’s foreign policy. It explores the inherent difficulties in dealing with Iran. And opportunities for India in Arab countries.


  • Iran is accorded high priority in India’s foreign policy.
  • This stands in stark contrast to the under-appreciation of relationship with Arab countries.

Reasons for a special relationship with Iran

  • Historical connections.
  • Civilisational bonds.
  • Energy supplies.
  • Regional security.
  • Geographic and demographic size, the geopolitical location next door.
  • Natural resources and the extraordinary talents of its people.

Importance of Arab countries for India

  • Millions of Indian immigrants in the Arab nations.
  • Massive hard currency remittances from them, and the density of commercial engagement with the Arab Gulf is important for India.
  • The UAE and Saudi Arabia have, in recent years, extended invaluable support in countering terrorism and blocked attempts to condemn India in the Muslim world.

Let’s analyse the issue of railway contract in Iran

  • Large countries with major foreign investments and projects win some and lose some.
  • Then there is no escaping the political risk associated with foreign projects.
  • And politics, both domestic and international, is all-consuming in Iran.
  • The sanctions regime imposed by the US has crippled the Iranian economy.
  • India is careful not to attract the US sanctions.
  • India did gain an exemption from the US sanctions regime for its participation in the Chabahar port project in Iran.
  • But they don’t apply to some of the partners suggested by Iran in the railway project.
  • So, Iran would like India to break the US sanctions regime.
  • A prudent India is resisting that temptation.
  • It would rather lose the railway contract than get into the raging crossfire between the US and Iran.

Issue of balancing the relations with Iran and U.S.

  • India’s Iran policy cannot be seen as a test of India’s “strategic autonomy”.
  • Some expect Delhi to conduct its relationship with Iran without a reference to either a cost-benefit calculus or Iran’s troubled relationship with others with whom India has important partnerships.
  • No government in Delhi can buy into that proposition.
  • Criticism of the government policy is similar to what happened in 2005 over India’s stance on Iran’s covert nuclear programme.
  • Delhi’s vote against Iran in the International Atomic Energy Agency drew criticism.
  • But governments stand proved right when Iran concluded a nuclear deal of its own with the US and major powers, a decade later.
  • Iran surely can take care of its own interests, and there is little reason why Delhi must back Tehran in every one of its fights with Washington.

India should focus on Arab countries

  • The Arab world has had its doors open for political, economic and technological cooperation with India.
  • Three moderate Arab nations — Egypt, Saudi Arabia and the UAE — are confronting radical forces in the region and are valuable partners for India in countering forces of destabilisation.
  •  There is real Chinese economic action in the Arab world as the region embraces China’s Belt and Road Initiative.
  • India is no minor economic force in the Arab world, having had a much longer engagement with the region than China.
  • Delhi must up its own commercial game in the Arab world, and one of the new possibilities for India lies in the domain of new technologies.
  • There is emerging sentiment among the Gulf Arabs to reduce the over-dependence on oil, promote alternative energy sources, invest in higher education, and develop technology hubs.

Consider the question “India’s relations with Iran has always been driven by the geopolitical contexts. This poses an inherent challenge for both countries. In light of this examine the importance of Iran for India and challenges India’s foreign policy faces in dealing with Iran.”


India must focus on elevating India’s economic partnership with the Arab world to the next level. For India, the costs of neglecting the new possibilities for wide-ranging Arabian business are far higher than a lost railway contract in Iran.

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