Foreign Policy Watch: India-Iran

May, 09, 2018

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
Dec, 04, 2017

[op-ed snap] How Chabahar Port could bring India and its partners a new spring

Image Source
Mains Paper 2 : Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Prelims level: INSTC; Chabahar Port

Mains level: Significance of Chabahar Port for India and Steps Taken in this regard.


  1. Chabahar Port, with first phase inaugurated on Sunday, has been jointly developed by India, Iran and Afghanistan.
  2. India, Iran and Afghanistan are committed to developing the port to handle a cargo of 80 million tonnes, present capacity is just 2.5 million tonnes.
  3. India sent its first consignment of 1.1 lakh tonnes of wheat for Afghanistan through the Chabahar Port on October 29 this year.
  4. Chabahar, which is located 72 kilometres west of Pakistan’s Gwadar port, holds immense strategic and economic significance for India.
International North South Transport Corridor (INSTC)
  1. To make Chabahar a commercially and strategically viable option, Chabahar project needs to be integrated with INSTC.
  2. India has constructed a 218 km-long (140 mile-long) road from Delaram in western Afghanistan to Zaranj on the Iran-Afghan border.
Strategic Significance
  1. Viable gateway to Afghanistan and Central Asia.
  2. Routes beyond the existing ones would provide a major impetus to Afghanistan’s economic reconstruction efforts.
  3. Many in Delhi view this as one of India’s projects to counter China’s BRI.
Economic Significance
  1. The Chabahar route plus INSTC could boost trade to a total of US$ 170 billion from India to Eurasia
  1. The new US administration’s attitude towards Iran has complicated the matters.
  2. New Delhi has been cautious.


International North South Transport Corridor (INSTC)
1.Initiated in 2000 by Russia, India and Iran, it is a multi-modal transportation route
3. It links the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St Petersburg in Russia.
Nov, 29, 2017

Chabahar port ready, next stage for India

Image Source


Mains Paper 2: IR | India and its neighborhood- relations.

From UPSC perspective, the following things are important:

Prelims level: Particulars of the Project(Read the attached stories)

Mains level: The port is strategically and economically important for India


Inauguration of First Phase of the Chabahar Port Project

  1. The building of Phase 1 of the Chabahar port has been completed by the Iranian side,
  2. President of Iran will inaugurate the port with all regional beneficiaries and neighbouring countries
  3. Benefits: It will enhance trade in the region
  4. With a final aim to connect not just to Afghanistan via rail but also to the 7,200-km International North-South Transport Corridor to Russia

Now it is India’s turn

  1. The inauguration of the port will effectively pave the way for India to carry forward the next phase of construction and development of two berths for its use, particularly for trade with Afghanistan
  2. Next, the government will develop a free-trade area around the port, and finally will complete the loop with a $1.6-billion railway line to Zahedan
  3. India has committed $500 million to the port project
  4. India has already completed the Zaranj-Delaram highway in Afghanistan, which would facilitate the trade to Kabul and eventually beyond to Central
Oct, 18, 2017

U.S. ploy against Iran: envoy


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: Chabahar port, Iran (geographical features, countries surrounding), India-Afghanistan-Iran trilateral agreement

Mains level: India-Iran relationship over years


Iran envoy lashes out at the US

  1. Iranian Ambassador said that U.S. was trying to ensure that India reduced oil imports from his country
  2. It is working to deprive Tehran of the Indian energy market
  3. This is after the U.S. announcement of a tougher line on Iran, even imposition of possible new sanctions

Change in trade stats

  1. India has cut its oil imports from Iran by approximately 20% in 2017, though its global imports have risen by 5.4%
  2. The Petroleum Ministry says India has been trying to “diversify” its imports so as to get more competitive rates
  3. One major development is India’s decision to import its first shipment of crude oil from the U.S., giving rise to speculation that New Delhi’s new policy will come at the cost of imports from Iran

Effect on India-Iran relations

  1. He said that U.S. President Donald Trump’s policy shift would not affect the India-Iran relationship
  2. Development of the Chabahar port project will remain on track

Other projects

  1. The India-Afghanistan-Iran trilateral agreement for Chabahar should be ratified by the Iranian parliament in the next few months
  2. India committed about $1.6 billion to build the Chabahar-Zahedan railway line, which will facilitate trade to Afghanistan along with Chabahar port
Jun, 04, 2016

Deal on Iran gas field may be sealed by October

  1. Context: India’s Farzad-B gas project by a consortium of Indian companies led by ONGC Videsh
  2. Farzad-B gas project: A common project by Iran and India to develop the Farzad-B field
  3. It is discovered in 2012 and estimated to have 21.68 trillion cubic feet (tcf) of gas reserves
  4. ONGC Videsh: The overseas arm of state-run Oil and Natural Gas Corporation
May, 24, 2016

India to develop Chahbahar port

  1. Context: A new bilateral agreement between Iran and India was signed during PM’s visit to Iran
  2. Chabahar: To develop and use the port of Chahbahar to access Central Asia and Afghanistan
  3. It is 1st such agreement & will provide India the right to develop and operate two terminals and five berths
  4. This is along with multipurpose cargo handling capacities in the port of Chahbahar for 10 years
  5. Other: In all, 11 agreements were signed by India and Iran, covering culture, finance and conservation
  6. Also the agreement between IPGPL (India Ports Global Private Limited) and Arya Banader of Iran was signed
May, 23, 2016

Immense opportunities after lifting of sanctions, says Modi

  1. Context: Prime Minister Narendra Modi’s visit to Iran (1st Indian PM to visit Iran in 15 years)
  2. PM: Lifting of international sanctions on Iran has opened up immense opportunities
  3. India is looking forward to expanding cooperation with Iran in sectors such as trade, investment, infrastructure and energy
  4. Chabahar port: Will provide wider connectivity
  5. Doubling oil imports: India is looking at doubling oil imports from Iran which, a few years back, was second-biggest oil supplier
  6. Farzad-B gas field: Going beyond the buyer-seller relationship to being genuine partners in the field of energy
May, 12, 2016

Iran ends free shipping of oil to India

  1. Iran has ended free shipping of crude oil to India
  2. It has asked refiners like Mangalore Refineries (MRPL) and Essar Oil to arrange for freight
  3. However, the NIOC has agreed to provide vessels and insurance till such time Indian companies are able to arrange the same
Apr, 18, 2016

Iran is India’s reliable partner, says Rouhani

  1. Context: External Affairs Minister Sushma Swaraj’s visit to Iran
  2. Rouhani: Iran can be a reliable partner for India’s energy needs
  3. Chabahar port: A defining partnership which has the potential of connecting the entire region
  4. India: Has been eyeing deeper energy ties with Iran following lifting of nuclear sanctions
  5. India has already lined up $20 billion as investment in the oil and gas and petrochemical and fertilizer sectors there
Apr, 11, 2016

India offers to invest $20 billion in Iran

  1. Context: Oil Minister Dharmendra Pradhan is in Iran with a delegation of industry executives for two days
  2. Indian offer: ITo invest $20 billion in Iran’s petrochemical, fertilizer and liquefied natural gas (LNG) facilities
  3. In return: India sought cheap natural gas and land to set up the units
Feb, 25, 2016

India approves $150 million Iran port plan

  1. News: India approved a $150 million project to develop the strategic Iranian port of Chabahar
  2. Background: In May 2015, New Delhi had signed a MoU with Tehran to develop the port on its southeastern coast
  3. Benefits: It provides opportunities to Indian companies to penetrate and enhance its footprint in the region
Feb, 04, 2016

India-Iran will try to resolve Chabahar Port issue at foreign office consultation

The officials representing India and Iran will attempt to resolve contentious issues related to the proposed Chabahar Port in Iran at foreign office consultation.

  1. The officials attributed the delays to Iran changing terms and conditions for the port, and India seeking a better deal after initially giving in.
  2. The discussions now centre on resolving conditions that both sides consider each other to be imposing.
  3. The consultation will also take up the International North South Transport Corridor (INSTC) project linking India with Central Asia and other countries.
  4. It will also consider regional and international issues such as the rise of the Sunni militant IS and peace talks in Afghanistan.
Jan, 18, 2016

Iran sanctions end: Cheaper oil, more trade opportunities for India

“We can sign commercial deals with Iran since payment is no longer an issue”.

  1. The lifting of the sanctions on Iran will benefit India with lower oil prices and more opportunities for trade.
  2. Iran will gradually ramp up production by 0.5 million barrels per day over the next six months.
  3. The lifting of sanctions also removes an important hurdle — U.S. pressure to hold off on the deal — in the proposed India-Iran gas pipeline
  4. India reportedly owes Iran $6.5 billion for crude oil purchases, the payment of which has so far been held up due to the sanctions.
  5. One of the major construction projects in Iran that India has taken an interest in is the development of the Chabahar Port.
Dec, 30, 2015

Government pitches for global north-south corridor

  1. The commerce ministry has pitched for popularisation of International North-South Transport Corridor (INSTC) in a bid to boost trade with former Soviet Union countries, Iran and Russia.
  2. The corridor is an alternative route through Tehran that significantly reduces costs and travel time.
  3. This moves is significant as govt. has adopted a market diversification strategy.
  4. This will help Indian exporters to reduce their dependence on traditional markets in the West.
  5. The ministry also wanted banks and insurance companies to play an active role in boosting traffic through INSTC.
Dec, 29, 2015

India asks Iran to expedite procedures of Farzad-B gas field

India considers Iran as an important partner and expressed satisfaction at the growing bilateral interaction in diverse area including energy, shipping, ports and railways.

  1. India has emphasised to Iran for early completion of all necessary procedures for its participation in the Farzad-B gas field worth 5 billion US dollars.
  2. India’s request was forwarded by External Affairs Minister to Iranian Minister for Economic Affairs and Finance in Joint Commission Meeting.
  3. Iranian side suggested participation of India’s public and private sectors in development of Chabahar Port and Chabahar Free Trade Zone (FTZ) and in setting up industrial units in it.
  4. India mentioned that Chabahar port will facilitate linking Afghanistan and Central Asia with India which will result in enhanced trade and commerce.
Jul, 18, 2015

Iran promises preferential treatment to Indian investors

  1. With the lifting up of sanctions, Iran is looking towards India for huge investments.
  2. Major areas where India can invest are – Chabahar port, railways infrastructure, gas & oil projects especially the Farzad B oilfields, fertilizer and petrochemical projects.
Jul, 15, 2015

India welcomes Iran deal, wary of implications

  1. India and Iran have an annual bilateral trade of about $14 billion with high balance of trade problem due to sanctions in past.
  2. Benefits for India could be cheaper oil imports from Iran and access to Afghanistan through Chabahar port.
  3. Worries are that it could affect India-Israel relations, backlash from Saudi Arabia could lead to closer nuclear cooperation with Pak and Iran’s preferential treatment could go to Russia, China, US and Europe.
Apr, 03, 2015

How India gains from the Iran N-deal?

  1. The deal could have significant effects on India’s energy needs, as it will allow imports of oil and natural gas from Iran.
  2. Analysts point that oil prices would drop further as a permanent agreement would be reached with Iran, as Iran would then increase its oil production.
  3. A fall in global oil prices would be good news for India. Why?

A $1/barrel fall in international crude oil prices is likely to reduce India’s net import bill by $0.9 billion a year.


What else?

  • The Farzad-B gas field project – Discovered by OVL in 2008, might receive a fillip because India could not pursue the project aggressively until now, due to US sanctions against Iran.
  • Gas Pipeline – Between India and Iran.
  • Chabahar Port Route – The peace agreement will lead Indian govt. to push for completion of Chabahar port route to Afghanistan, a gateway to Central Asia.
Feb, 02, 2015

Indian presence in Chabahar

  1. India to enter into a JV port project in the Chabahar province in Iran with close proximity to the Strait of Hormuz which facilitates ~40% of the global oil trade.
  2. This is India’s answer to the Chinese control over at the Gwadar Port.