Iranian President’s visit to India: an opportunity to review bilateral ties

Context:

• Iranian President Hassan Rouhani’s recent state visit to India has strengthened the prospects of India-Iran relations.

Background:

• 15^th – 17^th February, 2018: Hassan Rouhani, President of the Islamic Republic of Iran, paid his first State Visit to India from 15-17 February 2018.
• President Hassan Rouhani’s visit took place against the background of rising tensions in the region.
• The visit also came amid uncertainty over the U.S.’s next move on Iran, given US’s take on Iran nuclear deal.
• On the day when President Rouhani met Prime Minister Narendra Modi, U.S. National Security Adviser H.R. McMaster asked countries to track their investments in Iran as these might be supporting terrorism and “murder across the Middle East”.

What are the nine-fold agreements and MoUs signed by India and Iran on a wide variety of issues?

At the end of President Rouhani’s visit, India and Iran issued a joint statement, which highlighted the nine agreements signed. They are as follows:

• Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.
• MoU on Exemption from Visa requirement for holders of Diplomatic Passports.
• Instrument of Ratification of Extradition Treaty.
• MoU on Cooperation in the field of Traditional Systems of Medicine.
• MoU on the establishment of an Expert Group on Trade Remedy Measures to promote. cooperation in areas of mutual interest.
• MoU on Cooperation in the field of Agriculture and Allied Sectors.
• MoU on Cooperation in the field of Health and Medicine.
• MoU on Postal Cooperation.
• Lease Contract for ShahidBeheshti Port-Phase 1 of Chabahar during Interim Period between Port and Maritime Organization (PMO), Iran and India Ports Global Limited (IPGL).

What are the major takeaways from Iranian President Dr. Hassan Rouhani’s first State visit to India?

The major takeaways from Iranian President Dr. Hassan Rouhani’s first State visit to India are as follows:

Joint Comprehensive Plan of Action (JCPOA):

• India expressed its support for full and effective implementation of the Joint Comprehensive Plan of Action (JCPOA) or the nuclear deal, which has come under pressure from the Donald Trump Administration.

Connectivity:

• The joint statement signed by the two leaders strongly stressed the need for ‘a strong, united, prosperous, pluralistic, democratic and independent Afghanistan, while supporting the National Unity Government in the country’.
• Special concentration has been deployed on the Chabahar port where India and Iran will see development in the co-operation in the energy, petroleum and gas sectors.
• The two leaders discussed about the progress on the International North South Transit Corridor (INSTC), which begins in Bander Abbas, and runs north to the Caspian Sea shore of Iran
• Early operationalisation of the INSTC, and interim lease contract for Chabahar, is critical to enhancing India’s connectivity with Afghanistan and Central Asia.

Energy cooperation:

• Both sides agreed to continue and increase the pace of negotiation for reaching appropriate results on energy cooperation, including Farzad B gas field.

Trade and investment:

• The two nations have agreed to set up a Joint Committee of officials to examine feasible options, including Rupee-Rial Arrangement.
• The two sides also agreed to undertake text based negotiations on Preferential Trade Agreement as well as conclusion of Bilateral Investment Treaty in a fixed time frame.
• India fully supports the accession of the Islamic Republic of Iran to the World Trade Organization.

What are the reasons for which Iran is important to India?

The reasons for which Iran is important to India are as follows:

Historic relation:

• Until 1947, India and Iran had long shared a common border as neighbours, with cultural and linguistic ties between the two ancient civilizations going back thousands of years.
• Independent India and Iran established diplomatic relations on 15 March 1950.
• Following the 1979 revolution, relations between Iran and India strengthened momentarily.
• In the 1990s, India and Iran supported the Northern Alliance in Afghanistan against the Taliban regime.
• They continue to collaborate in supporting the broad-based anti-Taliban government led by Ashraf Ghani and backed by the United States.

Chabahar port:

• India is growing and will need access to natural resources and market for which it needs access to central Asia circumventing Pakistan.
• By being close to India, Iran will benefit significantly by being its gateway which is already seen in the form of Chabahar port.
• The most important feature of the Iranian seaport is that it can serve as a transit route for India to trade with Iran, Afghanistan and Central Asia sidestepping Pakistan.

Crude oil needs:

• Iran made strong oil deals with India.
• Note: Iran is the second-largest supplier of crude oil to India, which makes Iran quite a big deal to India’s economic interests.
• India also uses Iran’s ports as a way to economically compete with Chinese-influenced Pakistan.

Iranian Nuclear deal:

• The Iranian Nuclear Deal, formally known as the Joint Comprehensive Plan of Action (JPCOA), signed by Iran and six global powers in 2015, created new opportunities for India in Iran.

Defense and security:

• India in the quest of becoming a Global Superpower requires projecting its power beyond its land & maritime borders.
• The best method is to ally with friendly countries and co-develop their ports & convert a part of it into Naval Facilities for Indian Navy.

What are the some strong headwinds that the Indo-Iranian relationship is facing?

The major hurdles that the Indo-Iranian relations are facing are as follows:

• First: despite Trump’s threats, Iran is placed much better in the region than ever before.
• But tensions between Washington and Tehran constrain the strategic space for India in dealing with Iran.
• Second: What should be worrying for India is the slow pace of the Chabahar port project, which has displeased the Iranians.
• Uncertainty surrounding American posture towards Iran is complicating India’s ability to deliver fast on Chabahar as Western manufacturers remain wary of supplying equipment for the Iranian port.
• They have also indicated that despite India developing the project, it won’t be exclusive to the country but Pakistan and China might also be invited to get involved.
• Bringing China and Pakistan in will be a challenge to Indian interests.
• Third: The Indo-Iranian cooperation on Afghanistan is also coming under stress with Tehran joining Russia and China in managing Pakistan’s role in the region.
• Fourth: Though the larger trade and energy ties between India and Iran are gradually growing, they are being overshadowed by India’s growing stakes in the Arab world and Israel.
• Fifth: Other challenges in bilateral relations relate to India’s growing ties with USA, Israel, Saudi Arabia and UAE, all of which are intractable rivals of Iran.

Conclusion:

• Both India and Iran seem to have come to the conclusion that there are a large number of areas in which their interests coincide and converge.
• And the Iranian president’s visit to India shows how the two countries are showing maturity and pragmatism in dealing with the ground realities.