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Day 87 – Q 2.In the context of US sanctions against Iran, discuss the ways in which India has protected her economic and strategic interests.

2. In the context of US sanctions against Iran, discuss the ways in which India has protected her economic and strategic interests.   

ईरान के खिलाफ अमेरिकी प्रतिबंधों के संदर्भ में, भारत ने अपने आर्थिक और सामरिक हितों की रक्षा जिन तरीकों से की है उसपर चर्चा करें।


The US has recently imposed sanctions through the Countering America’s Adversaries Through Sanctions Act (CAATSA), which imposes unilateral sanctions against Iran, Russia and North Korea. Even though India is not their primary target, it has become collateral damage to certain U.S. actions.


  • The immediate impact of the sanctions on India is that it can no longer use US dollars for transactions with Iran. Investment by Indian companies in Iran’s oil and gas development projects and pipeline projects, if sanctioned, may result in companies not being permitted to open new US bank accounts and facing restrictions on loans, licences and Ex-Im credit.
  • Consequently, India and Iran agreed to revive its 2012 rupee-rial payment mechanism to receive payments in Indian rupee, where half of the payments would be used to import products from India.
  • The once strong oil trade between the countries plummeted after the United States’ sanctions regimes disincentivized countries to purchase oil from Iran. The trade volume between India and Iran with respect to other products is expected to be affected after the recent turn of events, apart from the already existing caveat on petroleum trade, owing to the dwindling rupee-rial account. 
  • India may consider protecting its companies by using countermeasures such as blocking statutes, non-recognition of foreign judgments, clawback rights, reporting requirements – which all aim at preventing citizens or national entities from complying with the sanctions. A blocking statute is a mechanism used by countries to reduce or mitigate the impact of US sanctions on their citizens and businesses.
  • Further, India came out largely unscathed from the sanctions on Iran. In order to compensate for the loss of crude from Iran, India resorted to importing more from the US and Venezuela, even as it continued its imports from traditional suppliers such as Saudi Arabia and Iraq. 
  • Also, India has made successful forays to the UAE and Saudi Arabia, probably for that getting investments from these oil-rich kingdoms. Thus, India loosened its traditional and successful policy of maintaining a balanced relationship with Iran, Saudi Arabia and Israel. This also becomes important as Iran does not have that kind of spare wealth and nor is it a destination for the Indian diaspora.
  • Apart from bilateral trade, Iran seems to be holding an important position in terms of strategic importance for India.  Iran’s Chabahar port, plays a fundamental role in India’s trade connectivity with Afghanistan, Central Asia, Eurasia and Europe. This port is being developed by India. This port is geopolitically significant for India due to its strategic location near the Pakistan-China port of Gwadar in Balochistan province. The delay in the implementation of the project due to US sanctions had made Iran impatient, and it had started a strategic alliance with China.
  • India has secured a written assurance from the US to exempt this port from sanctions during the second 2+2 Ministerial Dialogue between India and US in December 2019.  Both countries also “welcomed the utilisation of the port for exports from Afghanistan and discussed ways to promote it”.
  • As a U.S. strategic partner, whose cooperation US has sought for its Free and Open Indo-Pacific strategy, India had hopes for further relaxation of sanctions with regards to Iran as well as Russia, considering India’s unique geopolitical and strategic needs.


India needs to be ready to deal with US sanctions in a more efficient and viable manner in the present and in the future. Further, enhancing India’s strategic autonomy needs to be refocused upon in light of changing global geopolitical scenario to safeguard India’s national interests.

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