Background, Economic Relations, Cooperation, Joint Ventures and Energy

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Background

  • Shared border till 1947. Common features in language, culture and traditions.

  • Established diplomatic links in 1950

  • We’re not close during the Shah regime as it was US backed

  • New phase of engagement after the Iranian revolution of 1979, though it still remained minimal

  • Came closer after the fall of Soviet Union

  • Iran’s relevance for India lies in its geographical location, size, hydrocarbon reserves

  • It can also provide an alternate route for trade and commerce with the Central Asian states

  • India’s new middle eastern strategy is developing around the three states of - Iran, Saudi Arabia and Israel.

Economic Relations

  • Tehran Declaration signed in 2001

  • New Delhi Declaration in 2003

  • Crude oil and natural gas

  • Imported 22 mn tonnes of crude oil valued at about $10 bn in 2009-10

    • Third largest market for Iranian crude

  • India exports refined oil to Iran

    • About 40 pc of refined oil consumer by Iran is imported from India

Cooperation

  • IPI gas pipeline

  • Development of the Farsi oil and gas blocks

  • South Pars gas field and LNG project

  • Chabahar container terminal project

  • Chabahar-Faraj-Bam railway project

  • Zaranj Delaram highway being built with financial support from India

Joint Ventures

  • Irano-Hind Shipping Company

  • Madras Fertilizer Company

  • Chennai Refinery

  • Indian companies such as Tata, Essar, OVL have presence in Iran

  • India is also a member of the International North-South Corridor project

  • In the process of finalising a Bilateral Investment Promotion & Protection Agreement (BIPPA) and a Double Taxation Avoidance Agreement (DTAA)

  • India-Iran Joint Commission meeting

  • The forum to hold bilateral talks on economic and trade issues

  • Hold Joint Business Council regularly

Energy

  • India is the third largest buyer of Iranian oil

  • Iran has the second largest reserves of natural gas

    • India had signed an agreement with Iran to purchase 5 mn tonnes of LNG per annum for 25 years from the 2nd half of 2009

    • This agreement could not be implement due to a dispute over prices

  • OVL has successfully executed a contract to explore the Farsi oil block.

  • Was awarded the development of this block in 2008

IPI Pipeline

  • India has not joined. There are many reasons for this.

  • A large part of the pipeline is through Pakistan which raises security concerns for India

  • Pricing is another issue

  • US has a major interest in killing the project

Culture and Education

About 8000 Iranian students studying in India

India’S Interests

  • Energy Security

    • Iran important for India’s energy security.

  • Iran has a high stake in West Asian politics and can influence it.

    • In Lebanon, Hizbollah government had come to power with support from Iran

Other countries presence/India’s marginalisation

  • Pakistan has signed pipeline deal

  • China is also making its presence felt. It is now Iran’s largest trading partner and is undertaking massive investments in the country

  • India’s presence is shrinking

  • Iran can play role in stability of Afghanistan

India’S Concerns

  • Iran has been insensitive to many issues of great concern to India

  • It has never supported India’s case in the OIC

Impact of India US Relations

  • Ever since India and the US began to transform their ties by changing the global nuclear order in through the Indo-US nuclear deal, Iran has become the litmus test that India has occasionally been asked to pass to satisfy US policymakers

  • Bush administration stated in 2006 that if India voted against the US motion against Iran at IAEA, Congress would likely not approve the Indo-US nuclear agreement

  • India then voted to refer Iran to the UNSC

  • The Hyde Act contained a ‘Statement of Policy’ which included riders designed to ensure India’s support for US policies regarding the Iranian nuclear issue.

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