India-Iran ties set to fly high: Energy partnership, enhanced trade on agenda


India’s multi-faceted ties with Iran are set to move into a higher trajectory, with a spate of significant outcomes emerging from Iran’s Foreign Minister Javad Zarif’s day-long visit to New Delhi. The proposals firmed up during the visit will scale up economic ties and transform the buyer-seller relationship to a genuine energy partnership.  

Indian private investors got a shot in the arm with Mr Zarif announcing in New Delhi that Iran is open to Indian private companies investing in the Chabahar Port. Mr Zarif is on his first visit to India after the historic nuclear deal struck between Iran and the P5+1 member countries last month.

“Both India and Iran are eager to engage in this. I believe we will soon start serious work,” Mr Zarif said in New Delhi, adding that the two countries already have an agreement in place. The deal to develop the Chabahar Port was signed between India and Iran in May 2015.

Forging energy partnership

India’s External Affairs Minister Sushma Swaraj met her Iranian counterpart in New Delhi on August 14 and discussed a host of “forward-looking proposals” that have set the stage for accelerating bilateral relations across the spectrum, which suffered due to a spate of Western sanctions imposed on Tehran to curtail its nuclear programme suspected of developing atomic weapons.

These proposals, among others, included a revamp of the manner in which the Joint Commission will function so that the focus is on energy, infrastructure and trade.

The decades-old energy relationship that was stressed by sanctions look poised for a qualitative transformation from the existing buyer seller relationship to “a genuine energy partnership involving both upstream and downstream.”

“We want Iran to regain its share of India’s oil imports and we expect Iran to also make efforts to help promote participation of Indian companies,” said Vikas Swarup, the spokesperson of India’s foreign office, after the talks. India conveyed its expectation that OVL will get an opportunity to on Farzad B gas block.  

Connectivity and Trade

Looking ahead, there will be closer cooperation in areas related to connectivity and infrastructure. Besides Chabahar, India and Iran also agreed to fast-track the International North South Transport Corridor that is poised to be a game-changer in enhancing connectivity across South Asia and Central Asia. India is also set to assist in the development of Iranian railways sector, where Indian companies are both price and technology competitive.

The economic relations are headed for an upswing, with the two sides agreeing to move ahead rapidly on a Preferential Trading Agreement, and setting up of a Business-to-Business platform. India has invited Iranian Minister for Economic Affairs and Finance Mr. Ali Tayebnia for the next Joint Commission Meeting in New Delhi, which will be held in December.

When economic sanctions were imposed on Iran, India had to reduce its oil imports due to financial and logistical difficulties arising out of Western sanctions.

India’s cuts of oil imports during the sanctions period got plaudits from the US.  White House Press Secretary Josh Earnest had said that India had made a big sacrifice at its own economic expense to ensure global peace and security.

In 2013-14 India-Iran bilateral trade was USD 15 billion with India importing USD 10.33 billion worth of goods and exporting USD 4.92 billion worth of goods. However, in 2014-15 due to the sanctions imposed on Iran, India struggled to make payments and find insurers for crude oil it imported from Iran.

The Chabahar Port, located in southeastern Iran, is of strategic importance to India as it gives sea to land access to Afghanistan without having to depend on Pakistan to access Afghanistan.  It is also a gateway to Central Asia for India and a part of India’s larger strategic plan to deepen its engagement with the region.

(Sridhar Kumaraswamy contributed inputs for this article)

Author Profile

Manish Chand
Manish Chand
Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network ( and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.