India’s interest in Iran is firstly driven by a motive to secure and sustain assured supplies for its rising energy needs fulfilling which at times encounter restrains that limits its options. Secondly, in Delhi, experts contemplate possible ways for tackling with the impending US sanctions against Tehran as India is keen to secure uninterrupted supplies on favourable terms from Iran. Thirdly, India is at times startled and generally suspicious about Pakistan’s open and hidden intentions and is interested to use Tehran to counter-balance Islamabad.
India has been pitching for Iran-India deepwater pipeline as ‘a safe and secure long term means of gas monetization’ which will provide Iran access to a ‘large and growing gas market on its door step’.This also envisages offering Iran ‘an opportunity for higher net back’ and providing an opportunity for investment in Iran by Indian companies over a long time. Presentations made by senior India oil officials to their Iranian counterpart claim that such an arrangement will eventually cost less than the domestic price to produce energy say by safer conversion using its own coal reserves.It is promised that such an endeavour would act as a boost both for the Indian and the Iranian economy.Such initiatives could serve as a boost both for India with rising energy needs and Iran facing dwindling foreign reserves. The supply arrangement is envisaged to save India USD 1 billion every year thus offsetting the cost of building a 1300 km sea pipeline from Iran in 5-6 years.
On the sidelines of UN General Assembly session in New York on 27 September, discussions between the Foreign Ministers of Iran and India explored ways to expand economic cooperation that also included Chabahar port’s further development, ANI reported. Jawad Zarif, the Iranian Foreign Minister, termed India’s presence in Chabahar as ‘important’ and expressed optimism that investors from India and other countries will invest in the expansion of the port. By extending political backing and technical support to enable Iran to exploit and transport its gas production, big dividends for India are envisaged. The injections of investment involved are considered in Delhi sufficient enough to provide India with a prominent, persuasive and potent role. Zarif also reassured Delhi that Iran will always serve ‘as a reliable source of energy for India’. On 26 September, senior Foreign Ministry officials from Afghanistan, Iran and India met in Delhi to reiterate their focus on ‘consolidating economic cooperation, including Chabahar’.
Iran sees India throwing a lifeline to survive through the economic hardships it is facing such as growing pressure from US, long running rivalries with Saudi Arabia and UAE. Under the circumstances, securing Iranian supplies on favourable terms will be seen as a boost for the Indian economy which hopes to improve its prospects even further by building possible connections for supplies from Oman and on prospects to extend the network further by connecting Qatar as a potential additional supplier.
Costs considerations too play a prominent role in India’s pursuits of its external economic relations. Both the Indian and Afghan sides signalled their commitment to the development Chabahar’s strategic port just two days prior to the 28 September 2+2 talks held between the US and Indian Foreign and Defence Ministers in Delhi.
Delhi is also eager to thwart Islamabad’s initiatives which would be passing of the pipelines through Pakistan’s territory to reach India. Every time a step is taken forward counter proposals and alternative initiatives are floated to hint that India is exploring options that could be more secure, safer and economically competitive.
Prospects of Iranian energy supplies to South Asia explored since early 1990s bear witness on, how over the years, stakeholders have messed up and missed opportunities which continued to remain dogged by being delayed and deferred and de-railed for decades.Prospects of building trust among the prospective partners continued to be shadowed by incidents including continuing violence in Afghanistan and long years of terrorist incidents in Pakistan. From Delhi’s perspective the jeopardising episodes include conflict in Kargil in summer 1999; the hijack of Indian Airlines plane on 31 December 1999; an armed attack at the Parliament of India in New Delhi on 13 December 2001; and attacks on Mumbai in November 2008.The prospects of an inclusive and equally agreeable Afghan Tariff and Trade Agreement with Pakistan (ATTAP) remained a contentious issue causing Afghanistan, Pakistan and India long years of stalled growth in regional trade.
To gain some manoeuvring space vis-a-vis US sanctions against trading with Russia and Iran, India is trying to circumvent the constrains to proceed its crucial deals with Moscow and Tehran. Delhi will be interested in extracting exemptions under which US defers or withholds its objections to enable India pursue its strategic deals with Iran and Russia. India’s recent foreign interactions with Tehran and Moscow including Russian President Vladimir Putin’s 4 October visit to Delhi were used to convey the following important signals to Washington, Beijing and Islamabad:
USA is not the sole supplier of technologies in the spheres of computer, space and air defence. India reserves the right to enter into deals with other suppliers to.Dollar will not be the sole currency for international trade and India will introduce steps to decrease a total dependence on dollars. With parliamentary elections expected in April 2019, Indian Premier Narendra Modi’s real test will be to find alternates to pursue connectivity, commerce and energy corridor with Iran when sanctions become fully enforced from November 2018. For India and Iran an important component for continuing their economic and trade cooperation is to establish alternative mechanisms to stimulate trade and investment. Both sides have agreed to Rupee-Rial arrangement and putting in place effective banking channel for business transactions.
To sum up, the pursuit of Energy security requires Delhi to secure and sustain a supply route from Tehran which offers lesser transportation costs, shorter supply time and favourable cost terms including barter option. India’s contribution in developing Iran’s port and shipping capacity at Chabahar is aimed to keep in check the growth potential of Pakistan’s Gwadar port. By extending cooperation and engaging with Iran, Delhi will be able to promote and advance its influence in Iran, Afghanistan and Central Asia. Afghanistan sees the growing Indo-Iranian cooperation along its borders as a means to help Kabul reduce its dependence on Pakistan for overland logistic linkages and access to sea.