India Committed to Iran Ties Despite US Pressure

Recognising the dynamic of geopolitical shifts in recent times, Iran and India have adopted a pragmatic approach in their bilateral engagement by focusing on mutual geostrategic and geo-economic interests in the region, experts said.

In light of the impending threat of United States tariffs, India is likely to reduce its reliance on American markets and the greenback by diversifying its trade partnerships through platforms such as BRICS and the Regional Comprehensive Economic Partnership (RCEP), former Ambassador Srikumar Menon told Sputnik India.

The long-standing US sanctions imposed on Iran have further complicated India's position. The diplomat stressed that it has been a challenging task for India to navigate the delicate balance between its friendly ties with both Iran and the United States.

"At one time, India was the single largest buyer of Iranian oil. However, once the time-limited exemptions on oil imports were withdrawn, India had to seek alternative sources to meet its crude petroleum requirements," the former ambassador said.

In the past, India has used alternative payment methods, including trade in national currencies and escrow accounts with Iranian banks in Indian financial institutions, to settle payments for oil imports from Iran in Rupees, he mentioned.

Despite these emerging challenges, several avenues still exist for continued India-Iran cooperation, particularly in infrastructure development projects involving roads, railways, and ports, the former diplomat said.

He noted that the strategic Chabahar Port project in Iran is the cornerstone of bilateral economic engagement, providing mutual benefits by facilitating key trade routes to Central Asia and the Middle East.

All things considered, both India and Iran seem well-positioned and ready to navigate the upcoming disruptions in trade markets as the threat of tariffs becomes a reality, Mr. Menon concluded.

Iran and India have maintained mutual exchanges within the framework of managed cooperation during the period of American sanctions, Dr Hassan Beheshtipour, an Iranian political expert and associate with the Institute for Iran-Eurasia Studies (IRAS), stated in a conversation with Sputnik India.

"Until the sanctions issue is resolved, I believe it is unlikely that economic exchanges between Iran and India will expand significantly. Currently, active partners in the economic sector have learned how to bypass American sanctions, enabling economic relations to continue in a limited capacity," Dr Beheshtipour explained.

In a similar vein, on May 13, 2024, eight years after the signing of the General Framework for Cooperation on Chabahar Port, Iran and India formalised a 10-year agreement for the operation of the Shahid Beheshti Terminal, thereby marking a milestone in bilateral trade, while boosting regional connectivity and economic cooperation, Shohreh Poolab, a geopolitical analyst based in Iran, commented on the recent conference held in Muscat, which was co-hosted by Oman, India, and Singapore.

"Chabahar Port holds strategic significance for India, serving as a gateway to Afghanistan, Central Asia, and Eurasian markets via the North-South Transport Corridor (INSTC). For Iran, its development enhances trade potential and positions the Chabahar Free Zone as a key transit hub," Poolab told Sputnik India.

She added that as regional tensions persist, Iran and India’s geographical and strategic interests are driving them toward deeper cooperation in the Indian Ocean, advancing maritime trade, economic growth, and regional stability.

Historically, sanctions have been ineffective in enforcing compliance, even among weaker nations, much less against Iran or India. Instead, they have often backfired, leading to alternative supply chains or boosting domestic innovations—as seen with India’s cryogenic engine development and Iran’s growing technological resilience, Professor Swaran Singh told Sputnik India.

India has successfully obtained waivers from US sanctions for its investments in Chabahar Port, where it has made significant contributions, he said.

Despite the threats during the Trump administration to revoke these waivers, India's recent federal budget has allocated ₹100 crore for Chabahar, underscoring its commitment to Iran, professor Swaran noted. This clearly indicates that India is unwilling to let its relationship with Iran be dictated by its ties with the United States, he concluded.

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