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Day 47 – Q 5.Where does Iran feature in India’s economic and geo-strategic puzzle? What has India done to deepen cooperation and further trust with Iran? Discuss.

5. Where does Iran feature in India’s economic and geo-strategic puzzle? What has India done to deepen cooperation and further trust with Iran? Discuss.  

भारत की आर्थिक और भू-रणनीतिक पहेली में ईरान कहाँ है? भारत ने ईरान के साथ सहयोग और गहरा करने के लिए क्या किया है? चर्चा करें।


Iran is a Middle East nation, which can be called as regional power on account of its strategic location, resources and historical importance.


Economic Significance 

  • Iran is India’s third largest oil supplier (making 15% of total oil imports), its rich surplus energy resources makes it a potential partner for resource deficit India.
  • India securing berths in Chabahar port will help in improving trade between India, Afghanistan and Central Asia. (Zaranj-Delaram Highway)
  • At Chabahar Free Trade Zone (FTZ) India will setup plants in sectors such as fertilizers, petrochemicals and metallurgy. This will ensure India’s energy security as well as increase economic activity among country.
  • Iran is a big market for India for India’s agro-products, software services, automobiles etc. These can be leveraged further.
  • India has been discussing for exploitation of Farzad B gas field.
  • The International North South Transport Corridor (INSTC) that passes through Iran can provide India connectivity to Central Asia and Europe.

Geo-Strategic Significance

  • The strategic location of the region, acts as a Eurasian bridge connecting Asia and Europe (Especially after signing TIR Convention and Ashgabat Agreement).
  • Regional security dynamics- Iran is important player for maintenance of peace in Afghanistan.
  • For combating piracy and securing Sea lanes of communication (SLoC) in the Indian Ocean region.
  • Iran-Baluchistan border can be used as a frontier, if Pakistan tries any misadventure in Jammu & Kashmir region. 

Measures/Initiatives taken by India 

  • Agreement on crude payment mechanism that allows for payment in Rupees and this will further enhance trade between both the nations.
  • Agreement for Avoidance of Double Taxation and prevention of fiscal evasion with respect to taxes on Income. It will avoid burden of double taxation between two countries in order to promote flow of investment and services.
  • MoU has been signed on exemption from Visa requirement for holders of Diplomatic Passports. 
  • MoU has been signed for establishment of an expert group on trade remedy measures to promote cooperation in areas of mutual interest. (Trade remedial measures such as anti-dumping, countervailing duty etc)
  • Cooperation in field of Health and medicine and traditional systems of medicine. 
  • MoU on Postal Cooperation includes exchange of experience, knowledge and technology in e-commerce and logistics services, cooperation on philately, feasibility studies on using air and surface transit capacities of both countries.
  • Lease contract for Shahid Behesti Port. (Phase 1 of Chabahar during interim period)


However, there are concerns plaguing due to USA withdrawal from JCPOA and CAATSA act. India must be vocal in its support of the French and German positions on the JCPOA, and should seek waiver from American sanctions. India must effectively utilize the opportunity of playing arbitrator role and emerge as a global power.

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